Type: Buy-to-let tracker mortgage
Tracker term: Two years
Tracker rate: Loans up to 85% of valuation – 1.24% above the Bank of England base rate, loans up to 75% of valuation – 0.99% above the Bank of England base rate
Payable rate: Loans up to 85% of valuation – 5.99%, loans up to 75% of valuation – 5.64%
Minimum loan: `£25,001
Maximum loan: Up to 85% of valuation subject to a maximum of £500,000
Income multiples: Rental income must be at least 100% of mortgage repayments on first property and 110% of mortgage repayments on additional properties
Conditions: Up to 10 properties allowed
Arrangement fee: 1% of the original loan
Redemption fee: 7% in year one, 6% in year two
Introducer’s fee: 0.5% of the original loan
This buy-to-let deal from Unity Home Loans is a two tracker available for loans up to 85 per cent of valuation, with a lower payable rate for loans up to 75 per cent of valuation.
Park Row Associates sales director Kevin Paterson thinks that with a rate loading of 0.99 per cent above the Bank of England base rate for loans up to 75 per cent of valuation and 1.24 per cent above the Bank of England base rate for loans up to 85 per cent of valuation, this product is pretty competitive.
He feels this is particularly true when you take into account that the rental calculation is based on 100 per cent of rental income, which he says is still pretty unusual. “The builder deposit facility is resurrected here, having been curtailed with many lenders in the market fearing a slump in prices. This is open to abuse and potentially exposes the lender, especially where a 100 per cent rental assessment is being fully utilised, which at 85 per cent of valuation could swallow up any equity, at least for a year or so. That said, the lender also allows gifted deposit and vendor discounts of up to 15 per cent and 10 per cent respectively.
On the down side, Paterson says the up-front fee of 1 per cent is a bit on the heavy side, and the early redemption charge at 7 per cent in year one and 6 per cent in year two is eye-watering. “On top of this, Unity Home Loans will also levy a charge of £185, but given the flexibility in the product that’s probably fair enough, he says.
Scanning the market for possible competitors Paterson says: “BM Solutions has a two-year tracker which is a highly competitive 0.11 per cent below the Bank of England base rate. There is also no fee on this deal, but the rental assessment is still coming in at 125 per cent.”
He adds that Chelsea Building Society has a two year tracker at 0.02 per cent below the Bank of England base rate and a lower rental assessment of 115 per cent, but there is a hefty fee of £2,750.
Paterson concludes: “The air is pretty thin where Unity have decided to pitch their product and it really pushes the criteria boundaries to the limit. The 100 per cent assessment of rental income puts this in fairly limited company so it will have a market.
Suitability to market: Good
Competitiveness of rate: Average
Adviser remuneration: Average