View more on these topics

Coventry goes for MORE

Coventry Building Society

MOREgage 5.65% Fixed Rate

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.

BROKER RATINGS

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

Overall 8/10

Recommended

Jupiter urges rethink on Sipp limit for commercial properties

Jupiter is calling on Chancellor Gordon Brown to recon-sider the borrowing limits on commercial properties in Sipps following the U-turn on residential properties in his pre-Budget report. Pensions development manager Jamie Fergusson says legitimate commercial prop-erty buyers could be disadvantaged after A-Day if the Inland Revenue does not change permitted borrowing levels back from 50 […]

Industry picks up pieces after Brown’s bombshell

Following Chancellor Gordon Brown’s Sipp bombshell in December 2005, life and pension offices must be wondering what other surprises the Treasury has up its sleeve this year. Standard Life is optimistically lobbying the Government to reverse its decision by allowing buy-to-let property in Sipps. Scottish Equitable is asking the Treasury to allay fears of a […]

Leeds launches new postal bond paying 5.00 per cent

Leeds Building Society is launching a 2-year fixed rate postal bond paying a return of 5.00 per cent.It was available from December 28, 2005 and will allow instant access to all the funds without notice, giving a guaranteed rate of 4.00 per cent.Leeds product development manager Stuart Fearn says: “This postal bond offers an unusual […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com