Type: Fixed-rate mortgage
Fixed term: Until November 2, 2007
Minimum loan: 25,001
Maximum loan: Up to 75% of valuation subject to a maximum of 500,000
Income multiples: Based on affordability and credit score
Redemption fee: None
Introducers fee: Refer to lender
Tel:0870 6000 367
Abbeys 4.49 per cent two-year fixed rate deal is available for loans up to 75% of valuation and has no early redemption fees.
London & Country mortgage specialist David Hollingworth believes this is a good product all round and that Abbey has done well to mix a competitive rate with the added bonus of no early repayment charges.
“The two-year fixed rate market has proved very popular in recent weeks, as rates have fallen. This deal on first glance does not stand out from some of the market leading rates, which are below 4.25 per cent. However, this product really stands out when you realise that there are no early repayment charges at any time, even during the fixed rate period. This is a feature rarely found let alone at a price so close to standard locked-in products.” he says.
In Hollingworths view, having no early repayment charges provides additional flexibility to the borrower. “For example this could be useful if they wish to overpay or perhaps foresee a house move within the product period and want to be free to review their entire mortgage, rather than take their chances with what is available from their lender on any top-up borrowing, “he says.
Considering the potential drawbacks of this deal Hollingworth says: “If you were to be picky, the arrangement fee is a touch bigger than average at 599 but this has to be factored in as a slightly higher price for the lack of early redemption charges. Unlike much of Abbeys range there is not a version of this product with incentives such as free valuation and legal work, although these would become repayable on redemption anyway, potentially clouding the benefit of the deal.”
He feels many borrowers will be happy to opt for the leading two year fixed rates with early redemption charges such as Newcastle at 4.22 per cent, Alliance & Leicester at 4.24 per cent and Halifax at 4.29 per cent.
However, he says it is hard to see any direct competition in terms of a two year fix without early redemption charges. He adds: “Others worthy of some attention would include fixed offerings without early redemption charges from Leeds & Holbeck a three-year fix at 4.99 per cent, although it carries compulsory insurance and Coventrys 4.85 per cent fixed for five years.
Suitability to market: Good
Competitiveness of mortgage rate: Good
Adviser remuneration: Average