Flexible fixed-rate mortgage with discount
Until March 31, 2005
Until March 31, 2014
Up to 95% of valuation subject to a maximum of£200,000, up to 90% of valuation subject to a maximum of £300,000, up to 85% of valuation subject to a maximum of £400,000
Up to 3.5 times principal income plus second or 2.75 times joint
Overpayments, payment holidays, interest calculated daily
Subject to negotiation
Tel: 0845 850 1711
Skipton Building Society is offering a flexible 10-year fixed rate mortgage that includes a 0.25 per cent discount in the first year. This means borrowers will pay 5.99 per cent in year one, rising to 6.24 per cent in the remaining nine years.
Aptitude Financial Planning principal Roy Rutter thinks the mortgage's best feature is its flexibility. He says: “There is no early redemption charge and unlimited repayments of capital are allowed without penalty. Skipton has a good reputation for service although I have felt it is not quite a household name.”
Rutter mentions that once the fixed rate period is over and the mortgage reverts to the society's standard variable rate, a 0.75 per cent loyalty discount may be applied. He finds this competitive against the small number of other lenders who offer this. He also thinks Skipton is offering quite generous income multiples.
However, he thinks the initial rate of 5.99 per cent for the first year looks expensive and is not really compensated for by the rate in the following nine years. He adds: “The arrangement fee is at the upper end of the scale but for a 10-year fix, I suppose it is reasonable.”
Looking at the prospective competitors, Rutter cites Standard Life Bank, Yorkshire Building Society and Cheltenham & Gloucester's new seven-year fix at 5.69 per cent. He predicts that other lenders will enter the long-term mortgage market but is not sure this type of mortgage will take off.
He explains: “Many borrowers still have memories of five and 10 year fixes taken out just when interest rates began falling.”
Suitability to market: Average
Competitiveness of mortgage rate: Poor
Adviser remuneration: Good