Type: Offset tracker remortgage product
Tracker term: Until June 1, 2009
Tracker rate: 0.19% above Bank of England base rate
Payable rate: 5.44%
Minimum loan: £25,001
Maximum loan: Up to 90% of valuation subject to a maximum of £2m, up to 75% of valuation up to £5m
Income multiples: Based on affordability
Conditions: Refunded valuation fees, free legal fees
Flexible features: Overpayments, offset facility
Arrangement fee: None
Redemption fee: 4% of the original loan in first two years plus £330 charge to reclaim legal fees only if mortgage is repaid in full
Introducer’s fee: 0.5% of original loan
Tel: 08707 590170
This offset remortgage product from Pink Home Loans is funded by Intelligent Finance. It is available up to 90 per cent of valuation, with income multiples based on affordability.
Setting out the features of this deal, London & Country mortgage specialist James Cotton says: “Intelligent Finance’s exclusive offset deal through Pink Home Loans is a tracker at 0.19 per cent above the Base Rate for two years – until June 1, 2009. The ongoing rate is Base plus 0.95 per cent. There is no arrangement fee and a refunded valuation and free legal work is also offered.
Considering the ways in which the product is good for IFAs and their clients Cotton says: “Although there are early repayment charges during the first two years, these are only payable only if the mortgage is repaid in full. The early repayment charges include a £330 clawback of legal fees. Otherwise, it allows unlimited regular or lump sum overpayments to be made without penalty.”
Cotton points out that the deal benefits from IF’s usual offset facility. “The mortgage balance can be offset against current accounts, savings accounts and Isas. With IF’s new reduced payment option, borrowers will also be able to choose whether to reduce either the mortgage term or their monthly payments when offsetting.”
Turning to the less appealing features of this mortgage Cotton finds it difficult to find any. “Overall, this is a very good value deal. IF’s offset capability is well known and this deal, with no fees and a sharp rate, is bound to do well. If I was being picky, I could say that it’s a shame the deal is not free from early repayment charges, but this is a minor point.”
Scanning the market for possible competitors Cotton says: “IF has a range of rate/fee combinations and the borrower’s loan size will determine the best value deal. There are now plenty of players in the two-year offset market. Lenders such as Clydesdale, First Direct and Woolwich all have decent offerings.”
In Cotton’s view, some borrowers with small mortgages, attracted by the lack of set-up fees, may prefer to take a longer-term deal to avoid regular switching costs. He thinks such as Melton Mowbray and Clydesdale have good long-term offset deals.
Summing up Cotton says: “Recently, IF’s deals, and particularly it’s exclusives, have tended to be favour larger loans due to high arrangement fees. This fee-free deal provides a good balance and will suit those with smaller mortgages and money to offset.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Good