View more on these topics

Skipton visits Uncle Sam

SKIPTON BUILDING SOCIETY

Stateside Tracker Mortgage

Type: Tracker mortgage

Tracker term: Until November 30, 2008

Tracker rate: US dollar Libor rate plus 1.85%

Payable rate: 2.99%

Minimum loan: £5,000

Maximum loan: Up to 95% of valuation subject to a maximum of £150,000
Income multiples: Up to 3.5 times principal income plus second or 2.75 times joint

Arrangement fee: £395

Redemption fee: 5% of mortgage balance until November 30, 2008

Introducer&#39s fee: Subject to negotiation

Tel: 0845 850 1711

Skipton&#39s stateside tracker mortgage tracks the US dollar Libor rate until November 30, 2008 and has a current payable rate of 2.99 per cent.

Casting his eye over the product features London and Country mortgage specialist David Hollingworth says: “The main feature that catches the eye is the extremely low rate this product offers. It achieves this by tracking the 3-month US dollar Libor rate, which has historically been lower than the Bank of England base rate. It effectively takes advantage of the lower rates in the US without the borrower having to take any currency risk. The product also offers some help with the set-up costs for remortgage borrowers in the shape of free legal work.”

Hollingworth&#39s main concern about the mortgage is that borrowers may only see the headline rate and not understand how the product works. He points out that the Libor rate is variable and there is no guarantee it will remain lower than the Bank of England base rate. He also feels the five-year lock-in period could make this mortgage unsuitable for some borrowers.

“The deal is a five-year tracker and carries penalties throughout the tracking period. This could prove too long for many borrowers who would prefer to have the option of reviewing their mortgage arrangements earlier,” he says.

Hollingworth believes there are no current five-year discounted rates to touch this mortgage but adds those looking to take a shorter term deal could look for a two-year discounted mortgage at a similar rate.

Assessing the main competitors for the mortgage, Hollingworth suggests Pink Home Loans&#39 international reserve product. This is fixed at 2.99 per cent until the end of 2003 and then tracks at 1.35 per cent above the average of the 3-month US dollar Libor and 3-month Euribor rates until the end of 2010. It also locks the borrower in for that period of time and so has a longer penalty than the Skipton product.

BROKER RATINGS:

Suitability to market Fair
Competitiveness of mortgage rate High
Flexibility Low
Adviser remuneration Fair

Overall 7/10

Recommended

Ex-Gartmore star to run new io fund

Tim Gregory, former Gartmore head of UK retail funds, is to manage a UK income and growth fund for new investment house io unit trust managers.The fund, which opens on October 6, will aim for a yield 10 per cent higher than the average yield of the FTSE All Share index. It will also seek […]

Wicks says DB built for men

Pensions Minister Malcolm Wicks is believed to have contentiously described final-salary schemes as pensions built for men at this year&#39s annual Labour Party conference in Bournemouth.The comment came in a private thinktank breakfast on Tuesday morning and echoes similar comments made by Baronness Hollis in June 2002 who described DB schemes as “fat-cat” pensions.To a […]

Group 300 network firms get free scanners for client data

IFA support services provider Group 300 will be offering members of its 199 RI network free scanners to help retain data and monitor client files.It has made the move as members are reluctant to pay for technological developments. The scanners will be available initially to the 60 appointed representative firms in the network division and […]

Pru says annuities good value without Omo

Prudential says the vast majority of people who take an annuity with their pension provider rather than use the open market option are getting good value.Figures from Prudential show that 70 per cent of policyholders who take their annuity with their provider are with the top six most competitive annuity providers between whose rates there […]

Inheritance tax when it is relevant

Neil Jones is Technical Support Manager with Canada Life’s ican Technical Services Team. Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland. A trust can offer significant advantages when an individual is […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com