Type: Variable rate offset mortgage
Mortgage term: Life of loan
Payable rate: 3.49%
Minimum loan: £1,000
Maximum loan: Up to 65% of valuation subject to a maximum of £1m
Income multiples: Based on affordability
Conditions: One free valuation up to £670, remortgage transfer service, available for properties in England, Wales, mainland Scotland and Northern Ireland.
Flexible features: Offset facility, unlimited overpayments, payment holidays of up to three months a year after six months, interest calculated daily
Arrangement fee: £1,800 plus £199 booking fee
Redemption fee: None
Introducer’s fee: Subject to negotiation
Tel: 0845 757 3612
This variable rate mortgage is one of two new deals that Coventry Intermediaries has added to its offset range. It has a current pay rate of 3.49 per cent and has a £1,800 arrangement fee plus a £199 booking fee. The other new deal is similar but has a rate of 3.69 per cent and a lower arrangement fee of £1,300 plus a £199 booking fee.
Discussing the useful features of the offset 3.49% Flexx for term, Paul White, consultant at Belgravia Insurance Consultants, says: “The flat fee feature, which can be added to the loan, suits bigger loans on a low loan-to-valuation. With only £199 to pay upfront, the clients’ mortgage can easily be got under way.”
White feels the free valuation up to £670 should cover most circumstances. “The remortgage transfer service is extremely efficient and so remarked upon by clients. The absence of an early repayment charge means that the borrower is free to remortgage at any stage,” he says.
White adds that the ability to take payment holidays is welcome, but he suspects that take-up will be low at 65 per cent of valuation.
This brings White on to the drawbacks of the deal. “At 65 per cent, the LTV is quite low, which means that it competes with a lot of other mortgage products if the offset option is not required.” He adds that annual bonuses are excluded from the income multiple guide of four times joint income.
Identifying the main competition that the Coventry could face, White says: “The Melton Mowbray offers a 3.35 per cent lifetime discount variable offset and is marginally cheaper on rate. This lender also charges no arrangement fee and is very much cheaper on fees than the Coventry product.”
He adds that the Melton Mowbray deal has a hefty early repayment charge of 3.25 per cent of the advance plus £190, but only for the first year. This deal also offers free legal fees.
“Solent Mortgage Services also packages the same product for the Melton Mowbray with a slightly higher fee structure. Otherwise, there are no other competitors in the lifetime offset field at the mid-3 per cent mark,” says White.
Summing up, White says: “Coventry has been conspicuous in still offering mortgages throughout the credit crunch, due to their funds for mortgages being raised through deposits, rather than the money market.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Average