MortgagesOct 30 2014

Teachers Building Society offers 95% LTV mortgage to NUT members

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National Union of Teachers members seeking to buy their first home are offered 95 per cent loan-to-value with an introductory rate of 4.89 per cent by Teachers Building Society.

The discounted rate, which lasts for the first two years, is 10 basis points less than the current standard variable rate of 4.99 per cent. The society says the overall cost for comparison or APR of the loan is 5.2 per cent.

Loans can be from the society’s stated minimum of £20,000 to £250,000 – the standard maximum amount allowed for 95 per cent LTVs.

Standard mortgage term limits are five to 35 years. But there is a caveat for the 95 per cent deal, which stipulates that the borrower has to be no older than age 70 at the end of the term.

Additional costs include the society’s standard £99 application fee and £1,999 arrangement fee. For comparison, the society’s standard arrangement fee is around £899. There is also a valuation fee on a standard scale starting at £200 for values up to £100,000, then £225 for values up to £150,000, and so on.

However, the arrangement fee can be added to the loan – provided that it does not take the loan over the maximum LTV.

REACTIONS

PROVIDER VIEW

James Bawa, chief executive of Teachers Building Society, said: “We are delighted to be able to offer this competitive 95 per cent LTV mortgage to members of the National Union of Teachers. We were founded to help teachers buy their first home, so it’s only right that we provide products that do just this.

“We are endorsed by the NUT, and the partnership with the union enables us to understand the issues facing the teaching community and tailor products to meet their needs.”

The special relationship between Teachers and the education profession stretches back nearly 50 years. Loans from the society are usually available to teachers in England, Scotland and Wales, as well as to everyone else, whether a teacher or not, in Dorset, Hampshire and Wiltshire – except in the case of this NUT-only deal.

ADVISER VIEW

David Hollingworth of Somerset-based adviser London and Country, said: “There are not too many variable deals at 95 per cent LTV. But Teachers’ main selling point is its understanding of the teaching profession, particularly those who are trainees starting out with a contract, for instance. So they are likely to take a more flexible view than other lenders in general.

“It is reasonably priced for what it is. However, there is a big arrangement fee to take into consideration, and a lot of people will actually be looking for a fixed-rate deal at the moment, rather than a variable rate one. The main competition is restricted to the small, local and regional lenders. For instance, at present Mansfield Building Society is offering a two-year discounted deal at 4.05 per cent that can go to 95 per cent LTV.”

CHARGES

£1,999 arrangement fee.

VERDICT

Even though a base-rate rise appears to be disappearing over the horizon, opting for a variable rate can seem a gamble. On the other hand, there is the possible greater flexibility on offer from Teachers’ for NUT members – something they are not likely to find in ready supply among the major lenders.