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Woolwich deal good ata stretch

Woolwich

First Time Buyer Two Year Fixed Rate

Type: Fixed-rate mortgage

Fixed term: Until November 30, 2009

Fixed rate: 6.29%

Minimum loan: £25,000

Maximum loan: Up to 95% of valuation subject to a maximum of £500,000

Income multiples: Based on affordability

Conditions: Mortgage reserve option available

Arrangement fee: £595

Redemption fee: 3% of the amount repaid in the first two years

Introducer’s fee: Refer to lender

Tel: 0845 070 1567

This Woolwich mortgage is a fixed rate deal at 6.29 per cent aimed at first-time buyers.

Discussing how the product will be received by IFAs, Mint Financial Services IFA Adrian Kidd says: “The only way I see this product as good for IFA’s is where clients are struggling with an income multiple or stretch. There are plenty of other rates – fixed or discounted – that kill this rate. “

However, he observes that the affordability based income multiples enable clients with a high credit score to borrow five times their main income, whereas some of the other lenders will lend 3.5 times. He also believes the set up fee is very competitive.

His main gripe about the product is that the fixed rate is not competitive. He thinks there are too many competitor products to list, but notes that Halifax and Nationwide do a variety of two, three and five-year rates that are up to 0.3 per cent cheaper than Woolwich. “Coventry has a 5.85 per cent rate that would give a high income multiple. Cheshire has a two-year discount at 5.69 per cent that has a £899 set up and that’s a good rate with low fee. I can see a maximum 0.25 per cent increase in rates if we get another hike by the Bank of England.”

Kidd concludes: “Woolwich has the worst online facility for me in the market. It always has problems being offline, especially in last few days. It has also shifted some back office operations to India which I think is a negative as generally the staff have been poorly trained as they are poorly paid. It is purely a bottom-line exercise for the company – I spoke to a woman there today and she was clueless.”

BROKER RATINGS

Suitability to market: Poor
Competitiveness of rate: Poor
Flexibility: Poor
Adviser remuneration: Average

Overall 2/10

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