Type: Fixed-rate offset mortgage
Fixed-term: Until September 30, 2011
Fixed rate: 4.65%
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, one free valuation up to £640, free legal fees for remortgages or £200 contribution towards legal costs
Flexible features: Offset facility, payment holiday of up to three months a year after six months, interets calculated daily
Arrangement fee: £800 plus £199 booking fee
Redemption fee: 4% of the amount repaid in the first two years
Introducer’s fee: Subject to negotiation
Tel: 0845 757 3612
This two-year fixed rate at 4.65 per cent from Coventry Building Society provides an offset facility.
Looking at this deal’s suitability to the market, London & Country mortgage specialist David Hollingworth says: “Coventry has cut the rate from 4.79 per cent to 4.65 per cent on its offset fixed rate for loan-to-valuations of up 75 per cent. Any improvement in rate is always welcome.”
Hollingworth says the arrangement fee is pretty typical at a total of £999. He adds that the Coventry offers help with costs in the shape of a free valuation and free legal work for remortgages.
“The rate may not appear to be the cheapest on the market but also comes with offset functionality and some other flexible features such as payment holidays,” he says.
Looking at the less attractive features of this deal, Hollingworth says: “It is hard to find anything particularly offensive about the product. You might consider the 5 per cent penalty-free overpayment facility a little bit stingy compared with other lenders, but the offsetting account negates this downside as spare funds can be placed in the savings account to cut the interest bill.”
Hollingworth believes the First Direct offset fixed rate is the main competitor, with a rate of 3.94 per cent for loans up to 75 per cent of valuation. “Other deals that could appeal to someone with a need for flexibility could include Northern Rock, which currently offers a 2 year flexible fix from 4.69 per cent.”
He adds that borrowers with a 50 per cent deposit/equity level can take advantage of the lower rate from Coventry at 4.25 per cent..
Summing up, Hollingworth says: “Offset currently looks a compelling proposition for those seeking to eat into their mortgage more quickly but is also attractive for those seeking better returns on their savings with deposit rates so low at the moment.
Suitability to market: Good
Competitiveness of rate: Good
Adviser remuneration: Good