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Coventry brings out handy cap

COVENTRY BUILDING SOCIETY

4.99% Capped Rate

Type:
Capped rate tracker mortgage

Capped term:
Until December 31, 2006

Capped rate:
4.99%

Tracker term:
Lifetime of loan

Tracker rate:
0.69% above Bank of England base rate

Payable rate:
4.99%

Minimum loan:
£1,500

Maximum loan:
Up to 95% of valuation subject to a maximum of £200,000,
up to 85% of valuation subject to a maximum of £300,000,
up to 75% of valuation subject to a maximum of £500,000,
up to 70% of valuation subject to a maximum of £1m

Income multiples:
Up to 95% of valuation – up to 3.75 times principal income plus second or 2.85 times joint,
up to 75% of valuation – up to four times principal income plus second or three times joint

Conditions:
Capital repayments of up to 5% a year allowed without penalty, arrangement fee waived for remortgages, free valuation up to £650

Arrangement fee:
£250 plus £199 booking fee

Redemption fee:
2% of mortgage balance until December 31, 2007

Introducer’ fee:
Subject to negotiation

Tel: 0845 776 7825

Coventry Building Society’ 4.99% capped rate mortgage is available for loans up to 95 per cent of valuation.

Priestfield Webber proprietor Malcolm Martin feels this is a good product to use for clients who are nervous of rising interest rates. He says: “The two-year capped rate period will allow customers to reassess the market after the best general election and make an informed decision regarding mortgage rates at that time. The rate for the third year is set generously at 0.69 per cent above bank base rate and this should not deter borrowers.

Martin thinks the free valuation, free mortgage indemnity premium to 90 per cent and no arrangement fee for remortgages makes this scheme very attractive and should tempt IFAs into mailshotting existing clients.

However, on the down side Martin says: “One year’ overhang when calculating early redemption penalties may prove a deterrent to some customers. A self-certification scheme would also be helpful for self-employed clients.”

Martin believes competition will come from Northern Rock’ two-year fixed rate, available up to 85 per cent of valuation in the same price range. He notes this has no extended tie-in. He adds: “Northern Rock allows clients to confirm that the loan is affordable to 85 per cent loan to value without the need to totally prove income. However, this scheme is fixed and not capped.”

BROKER RATINGS:

Suitability to market: Good
Flexibility: Good
Competitiveness of mortgage rate: Good
Adviser remuneration: Average

Overall 7/10

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