In anticipation of what are expected to be record ‘City’ bonuses this year Woolwich has launched a mortgage exclusively aimed at those expecting big bonus payments in the new year but want to buy now.
The discount tracker mortgage with an offset facility, dubbed the ‘City Bonus’ mortgage, targets an audience of bankers, brokers, consultants and entrepreneurs who expect large bonuses this winter. Only those who wish to borrow over £500,000 need apply.
The “City” mortgage offer starts as a 0.51 per cent discount off the bank’s base rate offering an initial pay rate of 4.24 per cent. This carries on until July 2007 when it reverts to base rate plus 0.49 per cent (5.24 per cent) for the life of the loan.
Andy Gray, head of mortgages for Woolwich, said: “The key to the mortgage is that it offers full offset facilities which could be of great help to customers who want to get into the market now. Most people expecting a large bonus in January or February will already have a good idea if they are going to get one. The problem is it doesn’t get paid until the New Year and if they want to buy a property now they might be restricted by what they can borrow and by the choice of mortgage type. If they wait for the bonus the property may have gone.
“The beauty of this loan is that customers can borrow now at a lower rate whilst they are waiting for the bonus to be paid. When they receive the bonus, they can then offset against the loan, reducing the payments and keeping costs down or simply pay off part of the mortgage without charge. It really is a flexible loan designed for those with large lump sums going into their account.”
The mortgage is expected to be most popular in a number of key areas across the South-East where record bonuses will boost an already buoyant property market. Those living in Kensington and Chelsea are expected to mop up 12 per cent of all bonuses over £30,000 in the country, with Wandsworth and City of London itself next. Surrey, famed for its stockbroker belt will see the greatest level of top bonuses outside of London in fifth place, with Essex, famed for its ‘barrow boy’ traders in seventh.
The mortgage has a fee of £1,499. The loan is fully flexible with no early repayment charges, drawdown facilities and it can be offset against current and savings accounts.
