Ipswich Building Society has rolled out a two-year fixed rate 3.09 per cent high loan-to-value mortgage product targeted at “mortgage misfits” such as small business owners and the self-employed.
The product, which is available for purchases only, offers 85 per cent LTV but is restricted geographically to borrowers in East Anglia.
The two-year fixed period expires on 31 October 2016, after which it reverts from 3.09 per cent to a variable rate of 5.49 per cent.
The minimum loan available is £25,000 and the maximum £500,000, while the mortgage product comes with a number of different fees.
A non-refundable application fee of £150 is payable at the time of application, and there is a completion charge of £849. The valuation fee, meanwhile, is calculated based on the value of the property.
In terms of early repayment charges, during the first two years there is no fee for overpayments of up to 50 per cent of the original loan amount. Anything above 50 per cent is charged at 3 per cent of the overpayment.
The product launch comes several weeks after the mutual announced the appointment of Michelle Stevens as its new head of mortgage sales.
Ms Stevens, who has 10 years of experience in the mutual sector, was tasked with coming up with competitive products and taking responsibility for the society’s mortgage offerings in intermediary and direct markets.
At the time of her appointment, she said: “I will seek to ensure Ipswich continues to differentiate its service from other lenders by recognising what brokers value – an agile, considered and individual approach to underwriting.
“A key focus initially will be developing Ipswich’s broker proposition even further by growing relationships and building new ones.”
Provider view: Michelle Stevens, head of mortgage sales at Ipswich Building Society, said: “We are committed to supporting so called ‘mortgage misfits’ such as small business owners and the self-employed. This product demonstrates the society’s continuing ambition to offer a viable and competitive alternative to the larger banks because, unlike the high street banks, we continue to offer borrowers the option to provide their own expenditure data rather than relying on a computer model to determine what ‘typical’ spending looks like.”
Adviser view: Daren O’Brien, director of London-based Aurora Financial Solutions, said: “Rates seem to be going up again quite quickly. This might be something we could consider using, but the rates might be too high even if interest rates are set to increase. Whether you want to look into this is debatable when there are better rates out there. We are typically seeing people with higher deposits in response to the mortgage market review. While 85 per cent LTV mortgages can be good, we are seeing people with higher deposits looking to lock into lower rates.”
Charges: There is a completion fee of £849, a non-refundable application fee of £150 and a 3 per cent charge on any overpayments of 50 per cent or more.
Verdict: This is certainly a reasonable rate for such a high LTV mortgage product, although there are other lenders that offer two-year fixed rate 85 per cent LTV mortgages at slightly more competitive rates.