Type: Fixed-rate mortgage combined with an unsecured personal loan
Fixed term: Until March 31, 2009
Fixed rate: 5.65%
Minimum loan: 1,500
Maximum loan: Up to 95% of valuation plus unsecured personal loan up to 30% of valuation subject to a maximum of 250,000, up to 90% of valuation subject to a maximum of 400,000, up to 80% of valuaiton subject to a maximum of 750,000, up to 75% of valuation subject to a maximum of 1m
Income multiples: Based on affordability and credit score,
Conditions: Capital repayments of up to 10% a year allowed without penalty, one free mortgage valuation up to 650 maximum
Arrangement fee: 250 plus 199 booking fee
Redemption fee: 4% of the amount repaid until March 31, 2009
Introducers fee: Subject to negotiation
Tel: 0845 757 361
Coventrys MOREgage 5.65 per cent fixed rate combines a fixed-rate mortgage with an unsecured personal loan.
Park Row Associates sales director Kevin Paterson says: There is an increasing number of these types of deals coming onto the market driven primarily by increasing property prices and the ever increasing squeeze on income multiples. By moving up to 30 per cent of the borrowing to an unsecured basis, the income multiple issue becomes less of a problem.
Paterson has never been a huge fan of this type of mortgage as it effectively puts the client into negative equity from day one. However the rates are attractive and managed properly, so this could be a real competitor to the Northern Rock together mortgage which has been so popular both with clients and brokers. he says.
Paterson notes that due to the underwriting criteria, the Northern Rock together mortgage has a very low default rate. He is sure that if the Coventry follow this well trodden path, the product will be sucessful. The absence of a higher lending fee is to be welcomed as is the fact that there is no early redemption penalties on the unsecured loan during the fixed rate period, which makes this very attractive, he says.
He also thinks the fees are reasonable and that the whole structure of the product looks like it has been carefully thought through.
However, on the down side Paterson says: It may tempt people to borrow more than theymight otherwise have done. The fixed rate is not that attractive but is offset by the unsecured rate which is competetive.
Summing up Paterson says: Overall it looks like a good, product aimed at a specific market. The premium on the fixed rate is offset by the rate of the unsecured rate, although without using the unsecured element the product is pretty average. But the lack of higher lender fee and reasonable up front fees are a bonus.
Suitability to market: Good
Competitiveness of rate: Good/Average
Adviser remuneration: Average