Type: Offset tracker mortgage
Tracker term: Life of loan
Tracker rate: 2.48% above the Bank of England base rate
Payable rate: 2.98%
Minimum loan: £5,000
Maximum loan: Up to 70% of valuation subject to a maximum of £2m
Income multiples: Based on affordability
Conditions: Capital repayments of up to 10% a year allowed without penalty in the tracker period, switch & save remortgage package comprising free valuation and in-house legal fees or free valuation and £200 cashback, available direct and through intermediaries
Arrangement fee: £999
Redemption fee: 1% of the original loan if mortgage is fully redeemed in the first three years
Introducer’s fee: Refer to lender
Tel: 0845 070 1567
This Woolwich offset tracker mortgage from Barclays tracks at 2.48 per cent above the Bank of England base rate for the life of the loan. It is available for loans of up to 70 per cent of valuation to £2m.
Considering how this product could be good for IFAs and their clients Highclere Financial Services partner Alan Lakey says: “Woolwich has issued two lifetime trackers which come with the valuable option to switch in to a fixed rate without penalty. One is base plus 2.48 per cent and other base plus 2.49 per cent. Both offer free legal fees and valuation for remortgages and there is also the option of a cashback if the free legal fees are not required.”
Lakey notes that looking for a cheap lifetime rate while retaining the ability to pop in to a fix once rates appear to be rising is the perfect answer. But he adds that this is subject to getting the timing right and also being offered a worthwhile fixed product.
“Being able to offset also provides a veneer of tax-efficiency which many cautious borrowers may wish to take advantage of. Offsetting at 2.98 per cent is the equivalent of 3.72 per cent for a basic taxpayer and 4.96 per cent for a higher rate taxpayer,” says Lakey.
Turning to the potential drawbacks Lakey says: “The dearer of the two Woolwich trackers also has a larger application fee – £1,499 as opposed to £999. With both loans available to 70 per cent of valuation, there is no obvious reason for the use of two almost identical products.”
Looking at the rest of the market for potential competitors, Lakey says: “These are the lowest life time rates available. But for those looking for a cheaper tracker both Accord and the Coventry offer two-year trackers at 0.5 per cent lower and Woolwich’s own two-year tracker leads the way at 2.39 per cent.”
Lakey concludes: “Woolwich has an unpleasant history of alienating brokers and of creating division rather than seeking co-operation. Many brokers will be reluctant to consider it until such antics have ended. It is down to the company to prove that its ethics and sense match the quality of the products.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Good