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GMAC deal better for remortgages

GMAC RESIDENTIAL FUNDING

Two-Year Express Discount

Type:
Discounted-rate mortgage

Discounted term:
Until April 1, 2006

Discount:
1.85%

Payable rate:
3.89%

Minimum loan:
£25,001

Maximum loan:
Up to 90% of valuation subject to a maximum of £350,000,
up to 85% of valuation subject to a maximum of £500,000,
up to 75% of valuation subject to a maximum of £750,000

Income multiples:
Up to 90% of valuation &#45up to 3.3 times principal income
plus second or 2.75 times joint,
up to 75% of valuation &#45 up to 3.75 times principal income
plus second or three times joint

Arrangement fee:
£395

Redemption fee:
3% of outstanding loan until April 1, 2006

Introducer&#39s fee:
0.35% of original loan

Tel: 01344 477477

GMAC Residential Funding&#39s two-year express discount mortgage offers a 1.85 per cent discount until April 1, 2006, giving an initial payable rate of 3.89 per cent.

The MarketPlace mortgage development manager Nathan Elliot thinks the free valuation and free legal fees for remortgages make this a better product for the remortgage market. Although he likes the £250 cashback for home purchases which will help borrowers with initial costs, he says: “I am struggling to see it being popular in the purchase market and it will only make a small ripple in the remortgage market. To make an impact on the two-year discount market, the product has to have more of an edge.”

Elliot thinks the mortgage would have more appeal if a couple of improvements were made to its features. He says: “Personally, I would like to see an option to make at least 5 per cent, if not 10 per cent, a year penalty-free repayments and perhaps slightly higher income multiples for loans to 90 per cent of valuation.” He also complains that the £395 arrangement fee is a bit on the high side and that the discounted rate could be a bit more competitive.

Assessing how the GMAC mortgage compares with the competition, Elliot concludes: “A handful of lenders are currently offering discounts of around 2 per cent or more on two-year deals that have freebies and more flexibility. Woolwich&#39s 2.15 per cent discount, giving a payable rate of 3.64 per cent,, is worth looking at.”

BROKER RATINGS:

Suitability to market: Average
Competitiveness of mortgage rate: Average
Adviser Remuneration: Poor
Overall 5/10

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