MortgagesAug 23 2016

The AA enters the mortgage market

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The AA has entered the mortgage market for the first time, with a range of products available exclusively to its breakdown members.

This includes two, three, four and five-year fixed, fees-assisted mortgages with free home emergency and repair cover and central heating emergency and repair cover for 12 months.

Customers will also get a 15 per cent discount on AA Home Insurance.

The mortgage launch comes a year after the AA announced a long-term partnership with Bank of Ireland UK and builds on its existing suite of credit cards, savings accounts, cash Isas and personal loans.

Mortgages are provided by Bank of Ireland and run from 60 per cent loan-to-value fixed rates from 2.08 per cent for a two-year deal, up to 90 per cent LTV five-year rates priced at 3.78 per cent.

A spokeswoman noted there were currently no plans to sell the mortgages through intermediary channels.

The AA is committed to being the pre-eminent membership organisation in the UK and a mortgage offer for members will help achieve that. Michael Johnson

The road recovery brand estimated people could be saving around £1,625 each year by switching provider - based on a £171,200 loan comparison between the top six lenders with and average standard variable rate of 3.98 per cent, against an AA two-year fix of 2.48 per cent with no arrangement fee.

A Populus survey of 4,688 AA members in June found that the average member has been on the same mortgage deal for over five years, while over a fifth have not reviewed their mortgage for more than 10 years.

Michael Johnson, director of financial services at the AA said a combination of high fees and a lack of information are stopping members from switching to a better deal.

“This mortgage range has been developed to respond to the needs of our members, by removing hidden costs and providing simple, straightforward information, to reduce the hassle of re-mortgaging or buying a home,” he commented.

“The AA is committed to being the pre-eminent membership organisation in the UK and a mortgage offer for members will help achieve that. The mortgage range is a strong addition to our existing financial services offer.”

AA members looking for a new deal would take a 15 minute call with one of the team of mortgage consultants, to establish whether they could be saving money on monthly mortgage repayments.

Members need to provide their AA membership number, approximate value of their home (or purchase price, postcode and year of purchase), current mortgage balance and interest rate they are paying.

peter.walker@ft.com