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Rare deal from Cheshire

Cheshire Building Society

Two-Year Discount

Type: Discounted rate mortgage

Discounted term: Two years

Discount: 1.15%

Payable rate: 6.19%

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

Income multiples: Up to 3.75 times principal income plus second or 3.25 times joint

Conditions: Free valuation for house purchases and remortgages on properties valued below £750,000, free mortgage payment protection insurance for the first three months

Arrangement Fee: £1,499

Redemption fee: 5% of the amount repaid in year one, 4% in year two

Introducer’s fee: Refer to lender

Tel: 0845 0554567

This 1.15 per cent discount is available for loans up to 95 per cent of valuation, with a pay rate of 6.19 per cent.
Belgravia Insurance Consultants consultant Paul White observes that deals up to 95 per cent of valuation are becoming rare and thinks the LTV limits of this product are generous.

Highlighting the useful features, White says: “Daily interest is a modern feature and the portability on offer could mean that redemption fees are avoided. Overpayments are allowed and lump sums can taken back by the borrower.”
White also likes the incentive of free valuation for properties valued up to £750,000 and the flat arrangement fee of £1,399 rather than a percentage of the loan. This can be added to the loan, but an extra £100 must be paid upfront upon application.

“There is no higher lending charge up to 90 per cent LTV, but for higher loan amounts incurring this charge, it can be added to the loan if desired,” he says.

Turning to the negative aspects of this deal White says: “Given the mortgage market’s reluctance to lower standard variable rates in line with cuts in the base rate, the fact that this deal is tied into the Cheshire’s SVR means that base rate trackers currently have the edge, as the latter are contractual and based on an independent third party’s decisions.”

White also complains that the £5,000 a year overpayments allowance could have been higher as some deals allow annual repayments of up to 10 per cent of the mortgage balance.
In terms of potential competitors, White refers to Chesham’s 5.75 per cent base rate tracker to May 31, 2010 and C&G’s 5.88 per cent fixed until December 31, 2009.

White concludes: “The Cheshire product is reasonable, but the rate is not enticing enough to draw in large amounts of business – which perhaps it does not want to attract anyway.”


Suitability to market: Average
Competitiveness of rate: Average
Flexibility: Average
Adviser remuneration: Average

Overall 6/10


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