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Great expectations for Woolwich’s City bonus loan

Brokers have welcomed Woolwich’s City bonus mortgage for staff expecting big bonuses.

The lender says only people who want to borrow more than 500,000 need apply. The loan works as a discounted tracker with an offset facility that starts at 0.51 per cent below base rate, rising to 0.49 per cent above base rate in July 2007 for the life of the loan.

Brokers believe Woolwich has found a niche in the market but warn the loan is only suitable for borrowers who regularly receive big bonuses.

Brentchase Financial Services mortgage specialist Mike Fitzgerald says: “It is a very good deal but brokers must realise it is not for those who might get a bonus but for those who always get a bonus.”

Woolwich head of mortgages Andy Gray says: “The key is it offers full offset facilities which could be of great help to customers who want to get into the market now. Most people expecting a big bonus in January or February will have a good idea if they are going to get one. The problem is it does not get paid until the new year and, if they want to buy a property now, they might be restricted by what they can borrow and choice of mortgage type. If they wait for the bonus, the property may have gone.

“The beauty of this loan is customers can borrow now at a lower rate while they are waiting for the bonus to be paid. When they receive the bonus, they can offset against the loan.”

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