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GMAC fixes it


Self-Certification Rate Control

Type: Self-cert fixed-rate mortgage followed by discount

Fixed term: Until April 1, 2006

Fixed rate: 5.29%

Discounted term: Until April 1, 2008

Discount: 0.5%

Minimum loan: 25,001

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

Income multiples: Up to 85% of valuation 3.3 times principal income plus second or 2.75 times joint, up to 75% of valuation 3.75 times principal income plus second or three times joint

Conditions: Capital repayments of up to 25% a year allowed without penalty

Arrangement fee: 495

Redemption fee: 3% of amount repaid in year one, 2% in year two, 3% in year three

Introducers fee: 0.5% of original loan

Tel: 0870 4844484

GMACs rate control mortgage combines a one-year fixed rate with a two-year discount.

Charcol product development manager Elliot Nathan likes its lack of an overhanging early redemption charge and the facility to repay up to 25 per cent a year penalty-free. He says: “The income multiples are above the norm but only for loans up to 75 per cent of valuation.”

Nathan regards the introducers fee as standard but feels the arrangement fee is at the higher end of the spectrum. He says: “While an 85 per cent loan to valuation is good for a self-cert deal, this product would be better value if it was available up to 90 per cent of valuation.”

Considering the negative aspects of the deal Nathan says: “While offering a good value rate of 5.29 per cent in the first year, the 0.5 per cent discount for the following two years is less generous.”

In terms of market suitability, Nathan thinks this product is only suitable to borrowers who feel that rates will fall in two or three years and do not want to lose out. However, he points out some borrowers may prefer Bank of Scotlands three year fixed at 5.55 per cent.

He says: “Although the Bank of Scotland deal is charged at a higher rate initially, over the three year period it will work out better value. The LTV and arrangement fee are the same as GMACs, and interest is calculated daily. However there is no penalty-free overpayment facility.”

Alternatively, Nathan suggests Charcols exclusive with Sun Bank which is fixed at 5.79 per cent and is available for loans to 85 per cent. He says: “The arrangement fee is 100 cheaper at 395 and borrowers can repay up to 10 per cent a year penalty free.”

Suitability to market: Poor
Competitiveness of mortgage rate: Average
Adviser remuneration: Average
Flexibility: Average

Overall 5/10


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