Type: Tracker mortgage
Tracker term: Two years
Tracker rate: Loans up to 95% of valuation – 0.13% above Bank of England base rate, loans up to 90% of valuation – 0.27% below the Bank of England base rate
Payable rate: Loans up to 95% of valuation – 5.88%, loans up to 90% of valuation – 5.48%
Minimum loan: £25,001
Maximum loan: Up to 95% of valuation subject to a maximum of £250,000, up to 90% of valuation subject to a maximum of £500,000, up to 85% of valuation subject to a maximum of £1m, up to 70% of valuation subject to no maximum
Income multiples: Based on affordability
Arrangement fee: £599, £499 for existing borrowers
Redemption fee: 1.5% of the original loan in the first two years
Introducer’s fee: Refer to lender
Tel: 0800 302010
This two-year tracker from Nationwide is available with a payable rate of 5.88 per cent for loans up to 90 per cent of valuation and 5.48 per cent for loans up to 90 per cent of valuation.
John Charcol Katie Tucker thinks this deal has a good rate and a good fee for purchases.. “All Nationwide trackers have a droplock option, allowing customers to switch to a fixed rate. All products allow up to £500 a month overpayments that are free from early redemption charges, payment holidays, underpayments and a borrow back facility is available from overpayments.”
Tucker points out that Nationwide loads the rate by 0.4 per cent as an alternative to higher lending charges for loans above 90 per cent of valuation. She says this works well on small loans and short-term rates. “For example, on its maximum £250,000 loan at 95 per cent of valuation, it is £2,000 over two years. Cheshire Building Society’s higher lending charge equivalent would be £4,657.”
Tucker regards Nationwide’s IT system as pretty good. “To reserve rates you go onto its intermediary e-trading website, obtain an accept DIP and continue to reserve the product required, paying any fees by credit or debit card. Updates are by e-mail or text,” she says.
Looking at the potential drawbacks Tucker thinks the restriction on overpayments to a maximum of £500 a month is a bit tight as compared with lenders that offer a more flexible maximum of 10 per cent a year.
She adds that Nationwide’s speed of service has also been disappointing recently.
“It is good for purchases but the difference between Nationwide’s purchase and remortgage rates are at least 0.2 per cent, except on the lifetime tracker and 25 year fix. Many other lenders often don’t differentiate,” says Tucker.
Identifying potential competitors Tucker says: “There are few deals with a low rate and what is now accepted to be a low’ fee. Halifax is charging £1,499 for its 5.39 per cent tracker, while Cheshire has a discount with a current pay rate of 5.49 per cent and £899 arrangement fee with free valuation. However, Cheshire has a HLC of 8.85 per cent for loans above 90 per cent of valuation.
For a direct comparison with no HLC to 95 per cent, Bank of Ireland has a two-year discount with a 5.59 per cent pay rate and a £799 fee.”
Tucker concludes: “The early redemption charge is low at 1.5 per cent, compared with Abbey’s 90 per cent LTV comparative 5.49 per cent two- year tracker rate. The Abbey deal has a £999 fee and one of those horrible multiplier early redemption charges that worsen over time.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Poor