The product has been restructured to give borrowers increased choice when arranging a buy-to-let mortgage. The product has a follow-on rate of Bank of England Base Rate plus 1.25 per cent and there is a facility to make part capital repayments each year.
The pay rate is 4.85 per cent (the same as its existing three-year deal) and is fixed until 31 August 2008. It has a 85 per cent LTV with no completion fee. The early repayment charge stands at 5 per cent of capital repaid from completion until 31 August 2008 followed by 2 per cent until 31 August 2010.
Tracie Pearce, group marketing manager at The Mortgage Works, said: “This product is designed to enable borrowers to take advantage of one less initial fee.
“The product does have an early repayment charge so effectively what we’re saying is the customer can take advantage of extra funds at the start of the mortgage and can then budget for the follow-on rate or choose to meet the early repayment charge should they wish to redeem their mortgage early.”
James Cotton, mortgage specialist at London & Country, said: “It just goes to show you get nothing in this world for free. There is no doubt that 4.85 per cent is a great rate but borrowers must either pay a high fee for it or accept an ERC beyond the fixed rate.
“While a high fee can be factored in, the tie-in changes the nature of the product completely and leaves the borrower with an uncertain end to a five-year term rather than the certainty of a fix for three years.”
