Type: Fixed-rate mortgage
Fixed term: Until August 31, 2009
Fixed rate: Up to 102% of valuation – 6.74%, up to 95% of valuation – 6.54%
Minimum loan: £30,000
Maximum loan: Up to 102% of valuation subject to a maximum of £500,000
Income multiples: Up to five times principal income plus second or 4.5 times joint
Conditions: Capital repayments of up to 10% a year allowed without penalty, valuation fee refunded up to £250, £150 contribution to legal fees for purchases, free remortgage package or £300 cashback for remortgages
Flexible features: Payment holidays, lump sum withdrawals through mortgage reserve account, offset facility
Arrangement fee: Up to 102% of valuation -£1,250, up to 95% of valuation – £399
Redemption fee: 3% of the amount repaid in the first two years plus £195 administration fee
Introducer’s fee: 0.4-0.45% of the original loan
Tel: 0845 845 0110
This fixed rate deal is part of a range of mortgages Scottish Widows Bank has introduced to help key workers onto the property ladder.
Highclere Financial Services partner Alan Lakey says not since Bank of Ireland introduced its first start product has a lender introduced a truly worthwhile and innovative offering.
Lakey says: “Scottish Widows has looked carefully at the market and observed a sector which is under-supported by most lenders. The scheme is limited to key workers and offers a loan up to 102 per cent of the property value, which enables fees to be met.”
He notes that the valuation fee will be refunded on completion up to a maximum of £250.
“A variety of rates are offered, dependent on the booking fee which ranges from £399 to £1,999. Key workers can be police, fire service, prison officers, various NHS workers and certain ranking military personnel.”
Lakey thinks the income multiples of five times the main income and 4.5 times joint are extremely generous for a 100 per cent scheme. He also thinks the introducer’s fee of 0.4-0.45 per cent is reasonable.
“The interest rates are higher than those offered by lenders such as C&G and Mortgage Express, but unlike these lenders, Scottish Widows allows offsetting and fee free remortgage packages,” says Lakey.
He thinks competition will be provided by Standard Life Bank, C&G, Mortgage Express and Northern Rock. These all offer 100 per cent loans.
Lakey concludes: “Scottish Widows Bank is seldom thought of as an innovator. However, we will all have to reconsider in the light of these offerings.”
Suitability to market: Good
Competitiveness of rate: Average
Adviser remuneration: Good