Type: Fixed-rate mortgage
Fixed term: Until June 30, 2014
Fixed rate: 3.18%
Minimum loan: £1,000
Maximum loan: Up to 65% of valuation subject to a maximum of £1m
Income multiples: Based on affordability
Conditions: Capital repayments of up to 5% a year allowed without penalty in the fixed-rate period, one free valuation up to £670, free remortgage transfer service
Flexible features: Overpayments, payment holidays of up to three months a year, interest calculated daily
Arrangement fee: £800 plus £199 booking fee
Redemption fee: 3% of the amount repaid in the first two years
Introducer’s fee: Subject to negotiation
Tel: 0845 757 3612
Coventry Building Society has reduced the rates on some of its residential and buy-to-let deals. One of these is the residential 3.18 per cent two-year fixed rate until 30.06.14, which has been reduced from 3.48 per cent. It is available for loans up to 65 per cent of valuation, with £199 booking fee and £800 arrangement fee.
Putting this mortgage in to its market context, London & Country Mortgagesassociate director of communications David Hollingworth says: “Despite the fact that the base rate shows no sign of shifting in the near term, two-year fixed rates continue to attract borrowers with lower rates and shorter lock-ins than longer-term products.”
In Hollingworth’s view, Coventry is a lender that has gone from strength to strength in the intermediary sector. “This deal carries a lot of the features we’ve come to expect. It is a clean, straightforward fix that offers a good rate with a fee of £999, with a free valuation and free legal work for remortgages to help minimise fees.”
He adds that it is all backed up with a strong service offering from a lender that sticks to a number of crowd pleasing pledges, most notably not differentiating pricing through different channels.
Turning to the potential drawbacks of the deal, Hollingworth says: “It seems harsh to pick fault with what is a straightforward, well priced package. Perhaps the allowance for 5 per cent a year overpayment without any early redemption charge is a little more restrictive than the 10 per cent limit offered by many lenders. However it is likely to be enough for most.”
Looking at the main competition the Coventry deal is likely to face, Hollingworth says: “Rates are constantly on the move at the moment but there are still some two-year fixed rates that are a touch below 3 per cent. HSBC even offers a 2 year fixed rate at 2.64 per cent but that is to 60 per cent LTV and with a big £1,999 fee.”
Hollingworth adds that First Direct offers a two-year fixed rate at 3.19 per cent with a smaller fee of £499. ING also offers a two-year fix at 3.29 per cent. “There are a number of rates in the same ballpark but Coventry’s deal shapes up very competitively,” says Hollingworth.
Summing up, Hollingworth says: “There will be discussion about how much value the security of a two-year deal will give but they remain popular and it is a very competitive market. It is good to see Coventry continue to compete for that business.
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Good