The GMAC-RFC tracker offer is available at Bank of England Base Rate (BBR) minus 0.01 per cent for three years, before reverting to BBR plus 0.99 per cent for the remainder of the term. Available up to 85 per cent loan-to-value, an arrangement fee of £1,495 exists, with rental assessment calculated at 100 per cent of the pay rate. The offer is available for purchase or remortgage. However the product has come under some criticism for its extended early redemption charges (ERCs) that stretch to five years. This decreases from 5 per cent in the first year, to 2 per cent in the fourth and fifth year.
David Hollingworth, mortgage specialist at London & Country, admitted the deal had two sides to it. He said: “On the one hand the deal is good because it is a low rate and it is based on 100 per cent rental calculations, which will appeal to borrowers. On the other hand borrowers need to be made aware of the overhanging charges."
However, Jeff Knight, director of marketing at GMAC-RFC, defended the decision to include an ERC overhang. He said: “The issue for many landlords is to ensure that the rental assessment stacks up, but because house price growth has outstripped rents and we have recently seen interest rises, we have identified demand for this type of product.”
He added: “The overhang is not an issue and where clients prefer the product with no overhang, we have plenty of other competitively priced buy to let products to choose from."
