Mortgages  

Ipswich Building Society stays local with two-year LTV rate

Daniel Liberto

The initial two-year fixed rate has been locked at 1.97 per cent until 31 March 2016, after which it will revert to the society’s standard variable rate, which at the time of launch was 5.49 per cent.

The overall cost for comparison was 5.0 per cent APR on the 75 per cent loan-to-value product that offered homebuyers a minimum loan amount of £100,000 and a maximum of £500,000 to purchase a property.

Free valuations have been made available for both purchase and remortgage customers by the society, who claimed to personally underwrite all mortgage applications rather than rely on automated credit scoring.

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There was, however, a completion fee of £975 and an application charge of £150, which was payable at the initial stage and non-refundable.

Up until 31 March 2016 the society confirmed that there will be no charges for overpayments of up to 50 per cent of the original loan. Overpayments above this threshold will be charged 3 per cent on the figure overpaid.

The product has been made exclusively available to intermediaries in Suffolk, Norfolk, Essex, Cambridgeshire, Bedfordshire and Hertfordshire, together with brokers affiliated with PMS and Sesame networks. Applications can only be made online.

A spokesperson for Ipswich Building Society said: “The product is part of the society’s continuing ambition to offer an alternative to larger financial institutions, ensuring that all of our products are personally underwritten, unlike high-street banks that rely on automated credit scoring.”

REACTIONS

Provider view: Paul Winter, chief executive of Ipswich Building Society, said: “We continue to offer competitive products for customers, brokers and intermediaries. We work closely with these groups to determine just what people want and need. Our size allows us to be flexible and agile in our product offering, this combined with our personal underwriting service ensures we offer best-in-class mortgage products.”

Adviser view: Daniel Bailey, mortgage adviser and owner of Derbyshire-based Middleton Finance, said: “This is a very good rate but I have found that lots of clients I have seen were very aware now that interest rates are likely to rise soon. As a result, a lot of them wanted to look at five-year fixed mortgages because they were concerned that two-year deals were not enough. It obviously varies on an individual basis but a five-year fix seemed to be what most people want. Two years comes around quickly and now that five-year rates have come down they appear to be the better option.”

Charges: The completion fee was £975 and the application fee £150, which was payable at the time of application and non-refundable. Early repayment charges, meanwhile, were 3 per cent of the original loan amount, although borrowers were permitted until 31 March 2016 to overpay up to 50 per cent of the original loan without charge.

Verdict: Though not the cheapest two-year fixed-rate mortgage out there, this product is competitive and one of a small handful to offer a decent initial rate on 75 per cent LTV. The society’s standard variable rate, however, could prove expensive when the two-year term comes to an end and attention should be paid to this. Interest rates were expected to rise in and around the same period that this two-year fixed-rate deal ends, which could leave borrowers forced to change provider and pay out more on application fees.