Type: Discounted-rate mortgage
Discounted term: Until June 30, 2012
Payable rate: 3.74%
Minimum loan: £1,000
Maximum loan: Up to 75% of valuation subject to a maximum of £1m
Income multiples: Based on affordability
Conditions: Capital repayments of up to 5% a year allowed without penalty
Free valuation up to £640, free legal fees for remortgages or £200 contribution towards legal costs
Flexible features: Overpayments, payment holidays of up to three months a year after first six months, interest calculated daily
Arrangement fee: £800 plus £199 booking fee
Redemption fee: 4% of amount repaid in first three years
Introducer’s fee: Subject to negotiation
Tel: 0845 7573612
This mortgage from Coventry Building Society has a 1 per cent discount of the society’s Standard Variable Rate, giving a payable rate of 3.74 per cent.
Unleash Advice Partnership IFA Adrian Kidd says: “In terms of a pure discount from the SVR, this product is one of two I have seen. This is a far better rate than the other deal from Newbury Building Society.”
Having said that, Kidd feels there are tracker rates in the market that are more competitive than the Coventry deal.
“I would say it is not exciting as it is offering is more of the same. It has useful flexible features, but nothing stands out.” He adds that the set up fees in terms of valuation and legal fees are paid.
Turning to the less appealing features of the Coventry product Kidd says: “I am unsure as to the thinking behind this deal. Why not just make it a tracker? My guess would be the SVR is at the Coventry’s discretion and it can make it whatever it wants. I would be reluctant to recommend this, particularly in an environment when rates start to move up.”
Scanning the mortgage market for the main competition Kidd says: “Woolwich has a two- year tracker at 3.24 per cent for the same fee and the Coventry also has a tracker/capped product at 3.49 per cent that I would recommend head and shoulders over the new discounted rate. I do not understand the logic, unless the Coventry is withdrawing the tracker/cap deal, which is far better.”
Suitability to market: Poor
Competitiveness of rate: Average
Adviser remuneration: Average