Cheshire Building Society
Type: Discounted rate mortgage
Discounted term: Three years
Payable rate: 4.95%
Minimum loan: £25,000, £30,000 for first-time buyers
Maximum loan: Up to 95% of valuation subject to a maximum of £350,000, up to 90% of valuation subject to a maximum of £400,000, up to 85% of valuation subject to a maximum of £500,000, up to 80% of valuation subject to a maximum of £750,000, loans above £750,000 negotiable
Income multiples: Up to 95% of valuation – 3.5 times principal income plus second or 2.75 times joint, up to 90% of valuation – 3.75 times principal income plus second or three times joint, 80% of valuation – 3.75 times principal income plus second or 3.25 times joint
Conditions: Free valuation, free mortgage payment protection insurance for the first three months
Flexible features: Overpayments up to £5,000 a year, underpayments, payment holidays, lump sum withdrawals between £500 and £25,000, interest calculated daily
Arrangement fee: £500
Redemption fee: Repayment of the discount in the first three years
Introducer’s fee: Refer to lender
Tel: 0845 0554567
This three-year deal From the Cheshire has a 1.84 per cent discount off the lender’s standard variable rate, giving a payable rate of 4.95 per cent.
London & Country mortgage specialist James Cotton thinks the deal offers a certain amount of flexibility as overpayments of up to £5,000 a year can be made without penalty as well as regular underpayments and lump sum withdrawals allowed against accrued overpayments. He notes that after three years, the rate reverts to the lender’s SVR of 6.79 per cent. “Loan to value limits are tiered based on loan size, with the maximum being 95 of valuation for loans up to £350,000. The arrangement fee is £500 and a free valuation is offered,” he says.
In Cotton’s view, this is a straightforward three-year discount with a bit of extra flexibility throw in. “ However, on the downside, Cotton’s main gripe with this deal is that the rate is just not competitive enough. “The cheapest three-year discounts were around 4.5 per cent before the base rate increase.
Cheshire’s deal may offer a bit more flexibility, but not enough to warrant paying that much more in most cases. Besides, the annual overpayment allowance of £5,000 is not that generous compared to the more standard 10 per cent.”
Cotton points out that the deal is available up to 95 per cent of valuation, which us higher than many cheaper deals, but the drawback is that higher lending charges await anyone borrowing more than 90 per cent.
Cotton believes there is a lot out there to compete with this deal. “Giraffe, for example, has a direct-only, three-year discount at 4.5 per cent and Nottingham has a good deal at 4.64 per cent with a free valuation and free legal work for remortgages. For those who prefer a fixed rate, there are a number of deals on a par with Cheshire’s in terms of rate – Nottingham, for example, has a three-year fix at 4.95 per cent,” he says.
Suitability to market: Average
Competitiveness of rate: Average
Adviser remuneration: Good