Type: Fixed-rate buy-to-let mortgage
Fixed term: Until June 30, 2013
Fixed rate: 5.4%
Minimum loan: £25,001
Maximum loan: Up to 60% of valuation subject to a maximum of £500,000, up to 50% of valuation subject to a maximum of £1m
Income multiples: Rental income must be at least 125% of the monthly mortgage interest
Conditions: Capital repayments of up to 5% a year allowed without penalty, one free valuation up to £670, free legal fees or £200 contribution towards legal costs for remortgages, up to three properties allowed with the society
Flexible features: Payment holidays of up to three months a year after first six months, interest calculated daily
Arrangement fee: £1,749 plus £250 booking fee
Redemption fee: 4% of the amount repaid in the first three years
Introducer’s fee: Subject to negotiation
Tel: 0845 7573612
This mortgage from Godiva Mortgages, the specialist intermediary arm of Coventry Building Society, is fixed at 5.4 per cent until June 30, 2013.
Bestinvest head of mortgages Peter O’Donovan says this is a competitively priced fixed rate which will provide borrowers with security while the mortgage market returns to normal. “With a fixed arrangement fee it will be attractive to people who need bigger loans but the maximum loan-to-valuation of 60 per cent is disappointing,” says O’Donovan.
He adds that a maximum 50 per cent LTV on new builds may provide some relief for borrowers and developers. “The remortgage incentive and one free valuation for purchases also make the initial fee very competitive and market leading,” says O’Donovan.
Discussing the potential drawbacks of the deal, O’Donovan says: “The early redemption charge, at 4 per cent for the fixed term, is quite steep.” He reiterates his earlier complaint that the maximum LTV of 60 per cent is disappointing.
Identifying products which could provide competition for this deal, O’Donovan highlights the Cheltenham & Gloucester three-year fixed rate at 5.19 per cent. This has an arrangement fee of 2.5 per cent.
Summing up O’Donovan says: “Coventry has introduced a number of market leading products, both residential and buy-to-let recently. The buy-to-let products are especially welcome in a deflated market. He adds that the flat fee is welcome in the current environment where some lenders charge a percentage of the loan amount.
“Hopefully Coventry can continue to do so with no real competition in place,” he says.
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Good