Type: Offset tracker mortgage
Tracker term: Life of loan
Tracker rate: 0.34% above the Bank of England base rate
Payable rate: 5.59%
Minimum loan: £500,000
Maximum loan: Up to 85% of valuation subject to a maximum of £2m
Income multiples: Based on affordability
Flexible features: Overpayments, underpayments, payment holidays, lump sum withdrawals, interest calculated daily, offsetting facility
Arrangement fee: £995
Redemption fee: None
Introducer’s fee: Refer to lender
Tel: 0845 070 1567
The Woolwich City Mortgage 2 is aimed at people who work in the City and receive high annual bonuses.
Introducing this deal, London & Country mortgage specialist James Cotton says: “Woolwich first launched the City Mortgage in October when it was becoming clear that city bonuses for the year would be some of the biggest ever. Originally, the rate was 0.51 per cent below base until June 2007, followed by 0.49 per cent above for life. “
He thinks that this version is again very specific in its promotion and its target audience. “However, it is worth just having a closer look at exactly what it is and what it does. Essentially this is a lifetime tracker with an offset facility and full flexible features, available for loans between £500,000 and £2m. “
Cotton notes that the rate is 0.34 per cent above base for the term of the loan – currently 5.59 per cent – and there are no early repayment charges. “The maximum LTV is 85 per cent and Woolwich now offers improved service propositions for large loans,” he says.
Cotton thinks the fee is a relatively high at £995 but notes the first City mortgage charged £1,495. He thinks £995 should not be too much of a burden considering the monthly repayments would be at least £2,225. He also likes the fact that valuation and legal work is free for remortgages.
“For those borrowing £500,000 or more this is a good deal. Those borrowers who do not need the offset facility, or who would prefer a shorter-term deal could get a better rate,” says Cotton.
Scanning the market for competitors Cotton says: “For those who need the offset facility, lenders such as Clydesdale and Intelligent Finance are worth considering for large loans. For those who don’t need the offset, Woolwich has another lifetime deal at 0.17 per cent above base.”
Cotton concludes: “Overall this is a good deal and could suit a lot of large loans, not just those of city bankers. Of course, despite these big city bonuses, the vast majority of borrowers are not in the market for mortgages of £500,000 and above.
Suitability to market:: Average
Competitiveness of rate: Good
Adviser remuneration: Good