Mortgage lenders do actually want to offer borrowers the best deal or the best remortgage deal but they are restricted by the lack of money in the system at present. The banks immediate instinct is survival at the moment and their need to protect their capital base by not lending money or only lending where the risk is reduced. This is one of the reasons why we have not seen many new interest rates lately. Most of the new rates around are coming from the banks that the government is a major shareholder in like the Royal Bank of Scotland and the Lloyds TSB Banking Group or in the case of the Northern Rock or the Bradford and Bingley total ownership.
Finally a market leading tracker rate product has been released by Alliance & Leicester who are now owned by the Santander Bank of Spain. They have just released a two year tracker rate deal which is 2.29% above the Bank of England base rate. The interest rate payable today is 2.79%. At the end of the two year deal you would revert to the banks standard variable interest rate which is currently 4.99%.
This finance product is only available for borrowers looking for a 60% loan-to-value based on a completed valuation. The minimum accepted is £50,000 and the maximum loan is £999,999. The maximum loan-to-value on this product is 60% which will limit this products appeal to the vast majority of borrowers. This product and other products with a low loan-to-value will not help the industry which really needs more 90% to 95% products for the first-time buyers or people looking to remortgage.
They are also offering a free valuation and or a remortgage transfer service (free legal fees) or you may choose to take a £200 cash back incentive. There is an arrangement fee of 2% of the original loan. The arrangement fee of 2% becomes very expensive if you are borrowing above £100,000. Should you repay your new tracker rate deal within the first two years then you will pay a Redemption or Penalty fee of 3% of the amount repaid in first two years if mortgage is repaid in full. This is a market leading product and will provide a borrower with low monthly payments for at least the first year.
Amazingly this tracker rate scheme offered by A&L is a flexible product which allows the borrower to overpay their mortgage, underpay it, borrow back money and they can choose to take a payment holiday break if required . The amount of flexibility depends on the amount of overpayments you have made. The interest is calculated on a monthly basis. This product is fully portable which allows the borrower to move home to another property without any penalties. The income multiples required to secure this scheme are based on Alliance & Leicester’s affordability calculator.
Overall this mortgage product is competitive and it very flexible, the arrangement fee is high for anyone looking for loan deal over £100,000. Don’t expect a quick mortgage as lenders are not in a hurry to complete quickly and some lenders are only accepting applications on a monthly quota basis. Other competitive tracker rate mortgages are available from Scottish Widows who are promoting a 2.69% deal above the base rate, with an arrangement fee of £999. The Nationwide Building Society is offering a three year tracker rate product at 2.78% above the base rate. Both these lenders are offering respectable rates. But don’t forget to consider a fixed rate mortgage deal. I believe that when interest rates are at the lowest levels ever seen you should consider the lowest fixed rate mortgage and then fix it for the longest period you feel comfortable with.
You should use the services of a Mortgage Adviser, preferably an adviser that uses the whole of the mortgage market to source you the best deal available for your personal circumstance. With the current finance turmoil in the banking industry an Adviser will have up todate information and access to the latest deals available.