Type: Fixed-rate remortgage
Fixed term; Two years
Fixed rate: Loans up to 95% of valuation – 7.25%, up to 90% of valuation – 6.75%, up to 75% of valuation – 6.55%
Minimum loan: £25,000
Maximum loan: Up to 95% of valuation subject to a maximum of £500,000, up to 85% of valuation subject to a maximum of £1m
Income multiples: Based on affordability
Conditions: Loans up to 95% of valuation for existing borrowers only, free valuation, free legal fees
Flexible features: Overpayments up to £500 a month, underpayments, payment holidays, lump sum withdrawals, interest calculated daily
Arrangement fee: None
Redemption fee: 1.5% of the mortgage balance in first two years
Introducer’s fee: Refer to lender
This two-year fixed-rate remortgage product from Nationwide is available up to 95 per cent of valuation for existing customers and up to 90 per cent of valuation for new introduced business.
Belgravia Insurance Consultants consultant Paul White observes that in the current market, rates that were considered sub-prime six months ago are now prime. He says this is why Nationwide’s 6.35 per cent 2 Year Fix, which is available for home purchase, is coming out top on mortgage sourcing software.
“Free valuation is an attractive feature of this deal. Its no arrangement fee is in stark contrast to other cheap headline rates with enormous fees,” says White.
Nationwide uses affordability to determine income multiples, but White looks at the guide income multiple of 4.25 times income. He feels this is generous enough to cover most needs.
“The redemption fees are waived for follow-on deals where there are 10 years unexpired on the mortgage. There is no higher lending charge, which simplifies the recommendation. I think a 90 per cent LTV is probably as good as it gets in the present market,” he says.
Discussing the potential drawbacks of the deal, White says that some borrowers might be caught out by the 10 years unexpired stipulation that he mentioned earlier, but says this can be foreseen.
He expects competition to come from Alliance & Leicester’s 6.39 per cent two-year tracker, but warns there is an arrangement fee that could run into thousands for relatively small mortgages. Principality’s 7.09 per cent two-year discount is also a contender as it has a lower arrangement fee than the Alliance & Leicester deal.
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Average