Type: Fixed-rate mortgage
Fixed term: Until June 30, 2014
Fixed rate: 5.69%
Minimum loan: £25,000
Maximum loan: Up to 75% of valuation subject to no maximum
Income multiples: Up to four times principal income plus second or 3.25 times joint
Conditions: Capital repayments of up to 10% a year allowed without penalty, free legal fees and valuation fees for remortgages
Flexible features: Overpayments, payment holidays, interest calculated daily
Arrangement fee: £599
Redemption fee: 5% of the amount repaid in year one, 4% in year two, 3% in years three to five, 2% in years six and seven
Introducer’s fee: Subject to negotiation
Tel: 08706 061621
This seven-year fixed rate mortgage from Skipton is available at 5.69 per cent for loans up to 75 per cent of valuation.
London & Country mortgage specialist David Hollingworth observes that longer-term fixed rates are very competitively priced when compared with some of the shorter-term options, with the added benefit of a longer period of certainty for the client. “The rate on Skipton’s product is certainly competitive in the long-term fixed rate market and the added incentives of free valuation and legal work for remortgages will be welcomed,” he says.
Hollingworth thinks the ability to overpay by up to 10 per cent a year is a good level of flexibility that is important for many borrowers looking at a longer-term product.
Turning to the less appealing features of this deal Hollingworth says: “The arrangement fee at £1,999 is large particularly when compared with some similar products in the market. Having said that the longer the term of the product, the lower the impact of a fee, and Skipton does offer alternative rate and fee structures.”
He adds that the deal carries a lock-in during the fixed rate period and for some borrowers a seven-year early redemption charge will be too long a tie-in period.
Scanning the market for the main competitors Hollingworth says: “The seven-year fixed rate market is not one that every lender is playing in, with most inhabiting the five and ten-year markets. However, Giraffe offers a seven-year fixed rate at 5.54 per cent with a £499 fee although it should be pointed out that interest is calculated annually, the deal doesn’t offer freebies and the end date is short.”
He also refers to seven-year fixed rates from Abbey and C&G, but feels these are off the pace on rate. “Britannia offers a product at 5.64 per cent with a £499 fee and a deal at 5.79 per cent with free valuation and legal work and a £399 fee,” he says.
Other competition could come from the 10 year market in Hollingworth’s view. He highlight’s a Woolwich deal that offers a rate of 5.59 per cent for 10 years with a £595 fee, free valuation and legal work for remortgage up to 80 per cent of valuation.
Summing up Hollingworth says: “The Skipton product offers a decent all-round rate with other structures for those that would prefer a lower fee. The only question mark is over how many borrowers will want to lock in for a seven-year period.
Suitability to market: Average
Competitiveness of rate: Good
Adviser remuneration: Good