Type: Tracker mortgage
Tracker term: Until August 31, 2011
Tracker rate: 2.99% above the Bank of England base rate
Payable rate: 3.49%
Minimum loan: £15,000
Maximum loan: Up to 75% of valuation subject to no maximum, up to 65% of valuation on new-build flats
Income multiples: Based on affordability
Conditions: Capital repayments of up to 10% a year allowed without penalty, no early redemption charge if borrowers switch to RBS Intermediary Partners fixed rate after three months of completion until end of tracker period
Arrangement fee: £999
Redemption fee: 3% of the amount repaid in the first two years
Introducer’s fee: Refer to lender
Tel: 08459 00 11 10
This tracker mortgage from RBS Intermediary Partners tracks at 2.99 per cent above the Bank of England base rate for two years, giving a payable rate of 3.49 per cent.
London & Country Mortgages technical manager Richard Morea thinks this deal widens the choice of competitive two-year trackers available to brokers. “With lenders increasing fixed rates, more borrowers are considering the merits of tracker deals, and will be tempted further by the track and switch facility included with this deal,” he says.
Switch and track allows the borrower to switch to a fixed rate without penalty, at any point in the tracker term outside the initial three months. Morea says this provides some longer-term security.
Discussing the less appealing features, Moreas says: “The rate is only open to purchase customers. which rules out many borrowers and it is still 0.5 per cent higher than its direct product.”
Morea suggests Abbey’s tracker at 2.79 per cent above the base rate as a potential competitor. “This is available to the same 75 per cent loan to value, has a similar fee at £995 but also offers a £250 cashback for purchase customers.”
He also mentions Alliance & Leicester, which has the same offer without the cashback. It is fully flexible, so allowing unlimited overpayments. “However, while both alernatives are more competitive on rate, they do not have the valuable switch to fixed option,” says Morea.
Suitability to market: Good
Competitiveness of rate: Average
Adviser remuneration: Good