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Tag: Lenders

Q&A; Is it safe to use small regional lenders, or would I be safer borrowing from a larger bank?

This is an interesting question for me as it crops up quite a lot; however, remember that borrowing from a bank is not the same as depositing money.

Firstly, on the reasons you should use small regional lenders, they are currently leading the market in terms of mortgage and savings rates, and you may well find their customer service slightly more endearing than the bigger banks.

Small building societies are releasing very competitive products currently, and there is little reason to shy away from them.

Were your mortgage lender to fail, though, there would be very little likelihood of the administrators coming around with repossession orders (if the law even permitted them to do so).

Selling all the properties in an entire loan book would be ludicrously complex and likely produce a much lower return than simply selling the book of loans to another institution, which is commonplace trading among banks and institutional investors.

Even if no buyer were forthcoming to purchase the loan book, the administrators would likely let the book run and pass administration to an outsourcing firm; again quite common.

The current UK government has made it clear that it will not allow any financial institution in the UK to fail, regardless of its size. The FSCS or Financial Services Compensation Scheme, currently does not discriminate between the size of institutions either, so as long as the provider is a part of this scheme and falls under UK regulation, your protection as a consumer is equal regardless of an institution’s size.

Woolwich announce new low-fee, fixed-rate products up to 75% loan-to-value

The Woolwich announced several new fixed-rate products yesterday, which herald the return of low-fee, low-rate mortgage products to the market, and are a pivotal moment in the UK’s turn from recession to recovery.

The rates, which include a two-year fixed at 3.89% available up to 70% loan-to-value, and 4.09% up to 75% loan-to-value, have an application fee of just £199, free valuation and legal work on remortgages or £200 cash back towards legal costs if using your own solicitors. Early repayment charges apply of 3% until 31/01/2012, and APR for both products is 2.8%.

They have also included a three-year fixed product at a similarly competitive rate.

That is a big departure from the glut of products currently offering headline rates with either £995 or even 2% arrangement fees and will kickstart the lending industry back into competitive pricing with more than just on-paper rate cuts.

The products are also available on new purchases and equally competitive in that space, although standard valuation and legal fees will apply on purchases.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. We do not usually charge a fee for mortgage advice, although you may pay up to 1.5% of the loan amount. Some buy-to-let and commercial loans are not regulated by the Financial Services Authority.

The Woolwich respond to criticism with revised rates

The Woolwich has responded to criticism around their stepped tracker rate, which, with a current headline rate of 1.98%, is one of the lowest rates available in the market.

I commented that the product was restricted to mortgages between £200K and £500K, severely limiting its market, when I announced the new rate here a couple of weeks ago. These restrictions have ceased as of today. The product is now available for loans between £5K and £1 Million.

Woolwich has not chosen to address the lengthy tie-in for five years with a 2% early repayment charge though, which could make the product very costly in the long term.

Instead, they have released a new lifetime tracker at the Bank of England Base Rate +2.29% with a £999 application fee available up to 70% loan to value, or at +2.69% with no fee again to 70% loan to value. The new products have early repayment charges of 1% for two years, making them much more favourable for some borrowers, but crucially both allow you to switch to a later fix without penalty if desired.

Both products would have a valuation fee of £295 for a purchase at 70% loan to value, with a mortgage of £100K and a lender Conveyancing fee of £126, giving an APR of 2.9% and 3.3%, respectively.

As usual, always read the separate Key Facts Illustration before deciding on a mortgage product, and to speak to a mortgage advisor, call 0345 4594490.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

We do not usually charge a fee for mortgage advice, although you may pay up to 1.5% of the loan amount. Some buy-to-let and commercial loans are not regulated by the Financial Services Authority.

Alliance & Leicester reduce Two-Year Fixed Rates

Alliance & Leicester announced further rate reductions yesterday on their 75% loan to value two-year fixed rates for new purchases.

The new product, with a £995 arrangement fee and a fixed rate of 4.53%, sits alongside their 4.48% product with a 1% arrangement fee.

The new rate brings them into line with rates from Abbey, but this product could benefit those who have recently gone self-employed or started a business; Alliance & Leicester require only one year of accounts minimum against two from Abbey. It also has a free valuation, much like Abbey’s three-year fix at the same rate.

The move continues the trend of lenders moving their products down to a similar baseline, but with no one currently undercutting the rest of the market, unlike what we have seen with variable rates from HSBC and Woolwich, although; swap rates have not dropped in the same fashion as Three-Month LIBOR which fuelled the reduction in variable rates.

The new rates have an APR of 5.1%, and the reversion rate currently stands at 4.99%. Early repayment charges are 3% of the loan until 31/12/2011, and the lender’s Conveyancing fee is typically £189.

Always consult the Key Facts Illustration before deciding on a mortgage product and seek independent advice. To speak to a mortgage advisor, call 0845 4594490.

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Alliance & Leicester reduce 3-year fixed remortgage rate

Alliance & Leicester have announced a reduction to 4.88% for their 3-year fixed rates, up to 70% loan to value with either a 1% or £995 arrangement fee.

The rate then reverts to 4.99% currently, giving an APR of 5.2%. Valuation fees are refunded on completion for a property value of up to £1 Million and would be £280 based on borrowing of £100k at 70% LTV.

Applicable fees are the lender’s Conveyancing fee of £189, Telegraphic transfer fee of £30 and early repayment charges of 3% of the loan until 30/11/2012.

Whilst this brings them into line with offerings from Abbey, it is still some .4% higher than the current products on offer from Woolwich.

As usual, always consult a Key Facts Illustration before deciding on a mortgage. For further information on this product or others, contact us on 0845 4594490 to speak to a mortgage broker.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. We do not usually charge a fee for mortgage advice although you do have the option to pay up to 1.5% of the loan amount. Some buy-to-let and commercial loans are not regulated by the Financial Services Authority.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. WE TYPICALLY CHARGE AN ADVICE FEE OF £299 PAID UPON FULL MORTGAGE OFFER. SOME BUY TO LET AND COMMERCIAL LOANS ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY
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