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Mortgages

Alliance & Leicester

Type: Tracker and fixed-rate mortgages

Description: Alliance & Leicester has introduced a new range of mortgages, including a two-year base rate tracker, and a two-year and a five-year fixed-rate product. The tracker operates on a 0.89 percentage point rate above the Bank of England base rate, presently giving a rate of 5.89 per cent, for the initial two years before reverting to a rate of 1.49 percentage points above the Bank of England base rate. A maximum of 75 per cent LTV is available and the arrangement fee is 2 per cent of the loan amount. The two-year fixed-rate offers 6.14 per cent until 31 August 2010, then standard variable rate. A maximum LTV of 75 per cent applies and there is a 2 per cent arrangement fee. The five year fixed rate - 7.14 per cent until 2013 - however, is available for up to 90 per cent LTV and has a fixed arrangement fee of £599. After the fixed period, the rate reverts to SVR. The tracker receives full flexible features - overpayments, underpayments etc - while the fixed rates offer a 10 per cent overpayment facility per annum.

Conditions: No early repayment charge applies to the tracker product. The maximum loan amount for all of these products is £1m. The SVR is currently 7.19 per cent.

Contact: www.alliance-leicester.co.uk

VERDICT

The tracker product is competitive on rate but most certainly not on fees, the 2 per cent set up is very high. Subject to postcode, there is a three-year discount or five-year tracker offering 5.80 per cent or 5.85 per cent respectively with £500 set-up fee. Also, Abbey has a rate of 5.97 per cent with roughly half of the fee due to Alliance & Leicester, so for these reasons this product is uncompetitive.

The two-year fixed-rate space has been heating up recently and again, Alliance & Leicester is found to be uncompetitive, both Abbey and Cheltenham & Gloucester offer the 6.14 per cent rate but with better fee structures.

The five-year deal is totally uncompetitive and appears to be a token gesture at best. Nationwide has a similar proposition at 6.30 per cent fixed for five years with a slightly higher fee, but worth it as it is 84 basis points cheaper on the rate.

two stars