Type: Fixed-rate mortgage
Fixed Term: Until April 30, 2013
Fixed Rate: 3.15%
Minimum loan: No minimum
Maximum loan: Up to 60% of valuation subject to a maximum of £1m
Income multiples: Based on affordability
Conditions: Capital repayments of up to 10% a year allowed without penalty in the fixed-rate period, available only to home movers and first-time buyers on a repayment basis
Arrangement fee: £999 plus £245 mortgage account fee
Redemption fee: 3% of the amount repaid in year one, 2% in year two
Introducer’s fee: Refer to lender
This two-year fixed rate of 3.15 per cent is available for loans on a capital repayment basis up to 60 per cent of valuation within a maximum of £1m. It is not available to remortgages.
Highclere Financial Services partner Alan Lakey says: ”This is a market-leading two-year fixed rate, a product which appeals to borrowers concerned about the short-term impact of imminent rate rises.
“Allowing applications up to £1m ensures that the product is available to a wide range of borrowers; a point emphasised by its availability to first time buyers.” He adds that fast-track applications are allowed, but are restricted to applications up to £500,000.
Lakey points out that the arrangement fee is £999, a figure he regards as reasonably standard, and that the early repayment charge reduces from 3 per cent to 2 per cent, with the ability to overpay up to 10 per cent a year without penalty in the fixed-rate period.
Considering the negative features of this deal, Lakey says: “Halifax is only allowing applications for repayment mortgages which mitigates against those borrowers using endowments or Isas, and provokes questions about its value judgement and agenda. Halifax procuration fees are also lower than those of its mainstream rivals, which could invite additional fee-charging by advisers,” says Lakey.
Lakey adds that Halifax has a remortgage product that is identical to this deal, but limits borrowing to £500,000. “This is a distinction that appears unnecessary and does not help to stimulate the market,” he says.
Identifying the main competition Lakey says: “Santander shows as their main competitor in the low loan-to-value two-year fixed arena. Unlike Halifax, it does not restrict its products to a repayment only basis. However, Santander does apply a maximum loan limit of £550, 000 which will not appeal to borrowers in affluent areas.”
Summing up, Lakey says: “Halifax rates have not been especially attractive over the past year and it is encouraging that its appetite for competition has returned.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Good