Type: Discounted rate mortgage
Discounted term: Two years
Payable rate: 5.79%
Minimum loan: £15,000
Maximum loan: Up to 95% of valuation subject to a maximum of £350,000, up to 90% of valuation subject to a maximum of £400,000, up to 85% of valuation subject to a maximum of £500,000, up to 80% of valuation subject to a maximum of £750,000, up to 75% of valuation subject to no maximum
Income multiples: Up to 3.75 times principal income plus second or 3.25 times joint
Conditions: Free valuation for loans under £750,000
Arrangement fee: £1,999
Redemption fee: 5% of the amount repaid in year one, 4% in year two
Introducer’s fee: Refer to lender
Tel: 0845 0554567
This Cheshire deal has a 1.55 per cent discount for two years, giving a payable rate of 5.79 per cent.
Discussing the positive features of this deal Belgravia Insurance Consultants consultant Paul White thinks that the free valuation for loans of less than £750,000 is generous. “Underpayments and overpayments of £5,000 are allowed each year without penalty and the mortgage is portable. The discount lasts a full 24 months from completion, as opposed to a fixed date in the future, where complications with the purchase could eat into the discounted period,” he says.
White also likes the flat fee of £1,999, as opposed to an ad valorem fee, which he thinks characterises many of the cheaper headline deals. He notes that the fee can also be added to the loan.
“Higher LTVs of up to 95 per cent can be accommodated, provided that the loan is no higher than £350,000, which is fair,” says White.
Turning to the less attractive features of the mortgage White says: “Loans of 95 per cent have to be referred, which makes recommendations to the client less clear for the broker.”
He also thinks that having different income multiples over three LTV tiers can be confusing.
Identifying the main competitors to the Cheshire deal White says: “For a lower headline rate, C&G has a 4.78 per cent tracker until July 31, 2010. It has a similar £99 submission fee, but the 2.5 per cent arrangement fee becomes more expensive than the Cheshire’s flat fee, once the loan exceeds a comparatively low £80,000. As a result, the Cheshire scores better on bigger loans.”
White also mentions Principality’s 5.44 per cent discount until April 30, 2010. It has an arrangement fee of 1.75 per cent and White thinks this looks more expensive than the Cheshire for loans above £115,000.
Summing up, White says: “Once stepped products have been filtered out, the Cheshire’s offering, while not being the cheapest, fits well into a high LTV mortgage of less than £350,000. However, the Cheshire’s lower income multiples do require substantial earnings from the client.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Average