Offset AND tracker mortgage at only 2.75% with tiny £699 fee from Coventry Building Society
64°Expired

Offset AND tracker mortgage at only 2.75% with tiny £699 fee from Coventry Building Society

30
Found 18th Aug 2013
This is a stonking deal for those with 65% LTV. Given inflation is running at around this level in real terms they're lending you money for free with no early repayment charge!!! This means if rates really do start to rise you can jump ship and switch to a fixed or whichever mortgage best suits you. They even pay for your mortgage valuation fee.

Please note the fees to set this up are tiny compared to fixed rates. Plus the BoE base rate may not rise for 3 years and even then is likely to only rise slowly (so unless you're looking at a >=5 yr fix a tracker is likely to be better for you).

As always offsets are useful for people who tend to have a high deposit to loan ratio (e.g. self employed people who need to save to pay their tax later in the year) or who have erratically timed income/ expenditure (e.g. bonuses).

Trackers are beneficial if you feel that interest rates are unlikely to rise in the near future or if you feel they may drop further (highly unlikely tbh).

Offset Flexx for Term
Current Rate 2.75%
Term Variable rate for term, currently 2.75%

The overall cost for comparison is 2.8% APR
Fees/Incentives
(Fees will not be refunded) Booking Fee: £199.00 (paid on application)
Arrangement Fee: £500.00 (can be added to mortgage)
Remortgage Transfer Service included
ONE mortgage valuation up to max. £670.00 included

Early Repayment Charges None

Maximum Loan to Value
(LTV) 65%
Interest charged Daily



Your home may be repossessed if you do not keep up repayments on your mortgage.




The Coventry Offset

Our Offset mortgage is a simple, flexible way to use the balance in a dedicated instant access savings account to either reduce the amount owed on your mortgage or your next normal monthly repayment. To give you real flexibility of choice you can swap between these two options at any time so you really are in control.


Remortgage Transfer Service

Our Remortgage Transfer Service will make moving your mortgage to the Society even easier, and we'll do it without any additional cost! For full details of what's included in this service please see the 'Remortgage Transfer Service' leaflet.


Should you wish to pay your mortgage off before the end of the agreed term, a £125.00 redemption fee will be payable, plus any applicable early repayment charges.



Additional Notes
You may have one standard mortgage valuation (up to a maximum of £670) which must be carried out by a valuer instructed by us. If you opt for a more extensive Homebuyers Report we will discount the cost of this by the amount of the standard mortgage valuation (up to a maximum of £670).

30 Comments

really not sure why you think this is so great.
lower rates and lower fees out there...

Original Poster

Show me one with an offset and tracker function and I'll eat my hat.

golfyboy

really not sure why you think this is so great.lower rates and lower fees … really not sure why you think this is so great.lower rates and lower fees out there...


Do you mind posting them here please? I'm interested!

first direct
their combo works out cheaper with a lower fee and they are a brilliant lender to deal with

Think i'll stick with my 2.69% fee free lifetime tracker thanks ;p

And before anyone asks - HSBC and not sure if its still available and of course you need reasonable LTV.
Edited by: "morpheus" 18th Aug 2013

what is a loan to value and how do I work it out?

golfyboy

first directtheir combo works out cheaper with a lower fee and they are a … first directtheir combo works out cheaper with a lower fee and they are a brilliant lender to deal with


I can't find a lower rate than OPs on the First Direct website?

morpheus

Think i'll stick with my 2.69% fee free lifetime tracker thanks ;p

lol I have a portable base plus 2% for 25yrs..

Original Poster

golfyboy

first directtheir combo works out cheaper with a lower fee and they are a … first directtheir combo works out cheaper with a lower fee and they are a brilliant lender to deal with



That's totally untrue. The First Direct mortgages are listed below:

mortgages.firstdirect.com/mor…382

The lowest is 2.99% (see near bottom of page) and you have to pay valutation fees so it is a) a higher interest rate and b) higher charges

Base Rate Tracker Offset - Standard 65% 2.99% 0% 3.1% APR £0 £499

I know this well as I happen to have a FD mortgage now and I currently pay 2.79% (at 2.29 + base) but this was from a limited edition mortgage they have with a £1000 fee that has long since gone. However I do agree FD are a good bank to deal with (no probs with them)

Original Poster

garethsmith72

lol I have a portable base plus 2% for 25yrs..



I'm sure some people are paying 0% interest by getting the mortgage pre-crash (ie pre 2008) when you had base rate MINUS a certain % available on some mortgages. However these deal are no longer available AND you would have had to have suffered the drop in house prices post 2008 to get them. Madness!

Original Poster

morpheus

Think i'll stick with my 2.69% fee free lifetime tracker thanks ;pAnd … Think i'll stick with my 2.69% fee free lifetime tracker thanks ;pAnd before anyone asks - HSBC and not sure if its still available and of course you need reasonable LTV.



PS I saw a base + 2.09 (ie 2.59%) fee free from HSBC when I chose to go for my 2.79% from FD but that was because it did not have a offset function

can a helpful person answer me please? what is loan to value and how do I work it out?

Original Poster

Infact the 2.59% fee free mortgage is stil here:

mortgages.hsbc.co.uk/pro…ree

However the offset function in my situation is far more valuable

Original Poster

LTV is calculated by dividing the amount you want to borrow (the loan) by the value of the property (i.e how much you will be exchanging for not including stamp duty/ other fees) multiplied by 100.

iloveshopping1

what is a loan to value and how do I work it out?



It is the percent that your mortgage is of your house value.

I.e. mortgage of 100000 with a house value of 200000, so 100000 divided by 200000 = 0.5 then multiple by 100 to get the percent, so 50%.

Hope that makes sense but it is late on a Sunday!!
Edited by: "frost1979" 18th Aug 2013

Agree with golfyboy plenty of no fee lower rates available. The only advantage is the offset part, though this is only useful if you run high balances in your account and tbh the set up fee more or less eats any savings this would make compared to a no fee deal. IMO a bit pointless going for a tracker as the only real benefit is that rates can reduce if boe drops (which is unlikely).

frost1979

It is the percent that your mortgage is of your house value.I.e. mortgage … It is the percent that your mortgage is of your house value.I.e. mortgage of 100000 with a house value of 200000, so 100000 divided by 200000 = 0.5 then multiple by 100 to get to get the percent, so 50%.Hope that makes sense but it is late on a Sunday!!



thanks. I'm 68, what can I do?? oww I need a teacher on this subject, I don't understand.

Just use a Whole of the market broker that charges no fees. Saves worrying whether you have the best deal


68 in age or LTV?

I'm guessing LTV. Not a lot you can do, either lower your mortgage, which might not be an option, by either borrowing less or paying off a lump sum, or hope the value of your house has gone up.

Edited by: "frost1979" 18th Aug 2013

Original Poster

iloveshopping1

thanks. I'm 68, what can I do?? oww I need a teacher on this subject, I … thanks. I'm 68, what can I do?? oww I need a teacher on this subject, I don't understand.



68 years old or a LTV of 68%. If you're 68 yo then all mortgages are problematic as they will want evidence you can pay off the loan on your income (i.e mainly pension). If it's 68% LTV then either find the extra deposit/ lower the price you're paying for the property by haggling to improve the LTV to 65% or look for a 70% LTV loan. PS the HSBC 2.59% mortgage is only for LTVs of 60% or below.

Despite what some posters seem to be saying this really is a great deal IF you are looking for both offset and tracker functions.

Original Poster

jacobtheamish

Just use a Whole of the market broker that charges no fees. Saves … Just use a Whole of the market broker that charges no fees. Saves worrying whether you have the best deal



The broker is not working for fee. If you don't pay a fee they will be incentivised to point you to whoever pays them the most commission.

Personally I would:

1. Calculate my LTV
2. Choose a variety of mortgages with different rates/ fees/ functions from comparison websites
3. Run my own personal finance figures through them to work out which truly is best (this is especially useful when comparing offsets to other mortgages as this is affected a lot by the amount of money you're likely to keep in your current/ savings accounts compared with the mortgage amount ie if you have more than ~ 15-20% of the mortgage amount kept in current/ savings accounts offsets are probably better but this is a general guideline figure and it's much better to run your actual figures through using the rates and fees from each of your preferred mortgages)
4. At the end you'll probably have to also equate a value to fixed versus tracker functions (fixed are useful if you need/ want to be certain repayments won't increase for a set amount of time; however most people with a good LTV i.e. 65% LTV or better are likely to have the ability to withstand small increases in rates and would be just throwing away money with a fixed rate that will charge more for a couple of years then when rates do rise the fixed rate period will end leaving you needing to change mortgage anyway)

Hope this helps

Chelsea have 1.84% £745 fee £130 application, legal and lending fees paid. 2yrs fixed. Allows overpayments but not offset facility. 65% LTV. Horses for courses I suppose but those base-rate-plus-2% deals will very quickly not look rosy as and when the base rate shoots up to 3-5% whenever that may be.

Best advice, IMHO, is to go crazy paying off as much as possible now, to get the LTV down and to allow wriggle-room eg with term when the rates go up.

Original Poster

Lordy, lord. Let's have a go at these figures then:

Imagine someone who wants a £100,000 mortgage but would keep £20,000 aside for problems with boilers/ redundancy/ tax/ other reasons:

Chelsea fees would be over 2 yrs = 745 + 130 + valuation fees (which are not covered unlike the Coventry mortgage) + interest on mortgage - any interest after tax that would be earned on the £20,000 buffer (given that most current accounts give 0% interest on deposits and because this money should be kept for emergencies you shouldn't put it in a savings account that is difficult to access and any interest earned would also be taxed this is pretty minimal)
= 875 + valuation fees + (100,000 (mortgage amount) x 1.89 x 2 years/100) - any interest after tax that would be earned on the £20,000 buffer
= £4655 + valuation fees - any interest after tax that would be earned on the £20,000 buffer

If you run this for 4 years you'll have to pay arrangement fees twice or it reverts to a terrible 5.79% at a cost of £9310 + TWO lots of valuation fees - any interest after tax that would be earned on the £20,000 buffer

Now compare this against the Coventry deal over 2 years
= 699 + ((mortgage - buffer) x 2.75 x 2 yrs /100)
= 699 + ((100,000 - 20,000) x 5.5/ 100)
= 5099 (note you don't have to pay valuation fees on this mortgage but also will not earn interest on the lump some either)

Or more impressively after 4 years
= 699 + ((mortgage - buffer) x 2.75 x 4 yrs /100)
= 9499

As the buffer sum increases relative to the mortgage amount the benefits of offsetting increase. Note Chelsea also have an offset version of the 2 yr fix but at a £1545 fee (i.e £800 more every 2 years for an offset function which just shows how much the banks think offsetting is worth!!!) thechelsea.co.uk/mor…es/

Original Poster

PS it may seem difficult to calculate but please do run your own figures as it's the only way to accurately decide which is best for you and can save you several thousands of pounds over the years. Otherwise the banks/ advisors will bend you over for a good spanking with huge fees whilst tempting you with a "low" rate.

I really am just trying to help you HUKDers!

Original Poster

Also what may be important for people is that offset mortgages can be used to loan even more money that you've previously paid back if needed e.g. if you find you need to buy a car instead of paying finance at a rate that is almost certainly way above 2.75% you can just increase your mortgage again (up to the limits of 65% LTV). I also find offsetting concentrates your mind on spending as little as possible and paying off my mortgage as soon as possible.

I personally use my offset in these ways and even use them as super cheap loans for things that will increase my income e.g. investing in shares but obviously this is risky.

Original Poster

PPS that's why it is important to agree on lending the maximum amount of money you can to hit a 65% LTV even if you don't need it and also specifying a term that is as long as possible so you essentially have a humongous pre-agreed overdraft facility charging minimal amounts of interest for decades to come. If you don't want the mortgage there's no early repayment fees on offsets so you can just switch and walk away.

This could be handy as I am coming out of a fixed deal in Dec and need to start looking about !!!

I have always wondered whether an offset mortgage would be good for us as we have quite a bit of savings which are shifted about each year in Isa's but not really earning a lot of money..... Just a thought though if I am re mortgaging would I be able to borrow more than I need to pay off my current mortgage provider so I could build a 2nd story extension to my property? If so I presume that the LTV would only be calculated prior to the extension being built hence the property value would be as it is now??

zchari5

I'm sure some people are paying 0% interest by getting the mortgage … I'm sure some people are paying 0% interest by getting the mortgage pre-crash (ie pre 2008) when you had base rate MINUS a certain % available on some mortgages. However these deal are no longer available AND you would have had to have suffered the drop in house prices post 2008 to get them. Madness!



I disagree with your last part I purchased my house in 2007 and got a tracker mortgage that is 0.5℅ above base rate and my house is worth more now than it was then

After some advice from the financially minded. I have a property that is let and it has a offset tracker with 1.35% above base. Currently we have more savings than we do mortgage. The property we live in is on bank of Scotland standard rate 4% loads left to pay on it. I was thinking it would be shrewd to move money around between the mortgages. Also which one would you pay off first? Thanks

illy1965

I disagree with your last part I purchased my house in 2007 and got a … I disagree with your last part I purchased my house in 2007 and got a tracker mortgage that is 0.5℅ above base rate and my house is worth more now than it was then


Mines also portable so I moved took x that was o/s on 0.5 plus base rate, and the remaining additional amount on a fixed rate.
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