Ray Boulger, senior technical manager at John Charcol, comments: “Our exclusive and the Halifax 4.29% deal will offer the best value in the 2 year fixed rate market for nearly all borrowers. Our shared exclusive through Alliance & Leicester offers a refunded valuation fee on purchases, which Halifax doesn’t, the arrangement fee is £104 less, the deal lasts for an extra month (until October 31st 2007) and the interest rate is marginally lower. On remortgages the differences are less as both deals offer a free or refunded valuation fee and free legals.
“Against that, although both products allow some overpayment without incurring an early repayment charge, the Halifax fixed is also flexible as it allows payment holidays and underpayments, which our shared exclusive does not. Therefore borrowers who value the ability to take a payment holiday or make underpayments would probably find it worthwhile paying the slightly higher cost to acquire the Halifax deal. Borrowers who don’t need this facility will find our exclusive cheaper.
“At the end of the two year deal borrowers who choose our exclusive will revert to Bank Base Rate +0.1%, currently 5.75%, whereas borrowers with the Halifax deal will revert to their SVR which is currently 1% higher at 6.75%. Even more importantly, at the end of the fixed rate, borrowers will want to reassess their options and A&L’s current policy is to allow existing borrowers to switch to any of their current new business rates, subject to paying a transfer fee of £250, as well as any product fee. Halifax only offers borrowers a retention rate, and we all know what that is a euphemism for.”
