Type: Tracker mortgage
Tracker term: Two years
Tracker rate: 0.89% above the Bank of England base rate
Payable rate: 5.89%
Minimum loan: £15,000 in England and Northern Ireland, £10,000 in Scotland & Wales
Maximum loan: Up to 75% of valuation subject to a maximum of £1m
Income multiples: Based on affordability
Flexible features: Overpayments, underpayments, payment holidays, lump sum withdrawals
Arrangement fee: 2% of the original loan
Redemption fee: None
Introducer’s fee: Subject to negotiation
Tel: 0845 300 2563
This two-year tracker mortgage from Alliance & Leicester has a payable rate of 5.89 per cent and flexible features.
London & Country technical manager Richard Morea believes this deal offers a very competitive rate and excellent flexibility, so it will be popular in spite of the potentially high fee. “The scheme tracks at 0.89 per cent above the base rate for two years, then reverts to 1.49 per cent above the base rate for the remainder of the term.
While the reversionary rate on this product is not as competitive as it once was, it may still prove to be more attractive than the standard variable rate, and could be a valuable feature,” he says.
Morea points out that the scheme has no early repayment charges, and any overpayments can be borrowed back, or used to cover payment holidays. “Like many of today’s best buys, the LTV is limited to 75 per cent, but the £1m maximum loan is more generous than many.
Looking at the less attractive features, Morea says: “The product fee at 2 per cent will be hard for borrowers to swallow, particularly those with big mortgages, as even a modest £50,000 loan will carry a fee of £1,000. “
Moreas thinks Principality and HSBC will provide competition. “Principality has a two year tracker at 0.74 per cent above base, which carries a low fixed fee of £749, and like A&L’s deal, it is available up to 75 per cent LTV.
“For borrowers remortgaging, HSBC’s lifetime tracker will be attractive. It tracks at 0.63 per cent above base for the life of the mortgage and has no early repayment charges from outset. The fee is £999 and it carries both a free valuation and standard legal work.”
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Good