At a time when fixed rates, the traditionally popular choice for first time buyers, are moving ever-upward, John Charcol has released a mortgage that is High Lender Charge (HLC) free up to 95 per cent loan-to-value (LTV). In addition, it offers a drop lock facility should fixed rates move in a favourable direction or if borrowers suddenly need the security that a fixed rate brings.
Key Product Details
* Bank Base Rate -0.01 per cent in year 1 – currently 4.49 per cent
* Bank Base Rate +0.39 per cent in year 2 – currently 4.89 per cent
* APR is 6.1 per cent
* HLC free to 95 per cent
* Arrangement fee is £495, exclusive fee £75
* 1 per cent Early Repayment Charge’s (ERCs) during stepped period, can repay 10 per cent pa ERC free
* Fully flexible
* Drop lock available
Ray Boulger, senior technical manager at John Charcol, said: “With the upward movement in swap rates over the last month or so, fixed rates really have become uncompetitive, and those that offer 95 per cent LTV with no HLC are even more so. This product, although not a fixed rate, does have a drop lock facility and so borrowers can move into a fixed rate should they need to at any time. Of course, the product would be good with just these features, but the rate is also highly competitive and allows first timers to pay that little bit less to start with which can be all important.
“With an average rate of 4.69 per cent across the two years it would still be up with the best deals, but we have added the stepped element to provide first time buyers with the bit of leeway that is often needed. For someone with a repayment mortgage of £100,000 over 25 years this means that they would pay £550 a month in the first year and £575 in year two.”
The product is the first in a number of mortgages aimed at re-dressing the shortage of first time buyers entering the market.
