The deal is available for loans up to 65 per cent of valuation and charges a £999 arrangement fee plus a £250 booking fee. The lender says the mortgage provides the best of both worlds in tracking at 3.3 per cent above the base rate until July 31, 2014, with the security of a 5.3 per cent capped rate over the tracker period. This means that the current pay rate is 3.8 per cent and if the base rate rises within the next two years, the rate on this deal will not go above 5.3 per cent.
The deal also has incentives including a remortgage transfer service and a free valuation up to £700. An early redemption charge of 3 per cent of the mortgage balance, plus a £125 admin fee, is payable in the first two years if the buy-to-let investor makes a capital repayment or overpayment of more than 5 per cent a year. As well as limited overpayments, other flexible features available are payment holidays of up to three months a year after the first six months and the daily calculation of interest.
However, the combination of flexibility and security comes at a price, since this type of deal can be more expensive than a conventional two-year tracker deal. The Mortgage Works has a tracker at 2.99 per cent above the base rate, giving a pay rate of 3.49 per cent for loans to 65 per cent of valuation. It has a switch to fix facility, enabling borrowers to switch to one of its fixed rates at any point without paying the 3 per cent ERC. However it has a 3.5 per cent arrangement fee, which works out more expensive than the Coventry deal for loans bigger than around £35,686.