Coventry Building Society, the UK’s third largest building society, has just launched a new range of capped and fixed rate mortgage deals that have no Early Repayment Charges (ERCs) within the capped or fixed rate period.
This range of products is ideal for borrowers who are either looking for the security of a fixed rate or who would like to take advantage of a low tracker rate, but with the security of maximum monthly payments that a capped rate provides. In addition, borrowers have the flexibility to switch their mortgage if required during the incentive period without being charged ERCs for doing so.
With so much uncertainty in the economy it isn’t surprising that some borrowers may feel anxious about tying themselves into a new mortgage deal – perhaps because they feel that their current employment situation may change or they’re looking to move home at some point in the next few years. As a result, they may choose to remain on their lender’s Standard Variable Rate, but this might not be the best move. As we saw last week, Bank of Scotland announced an increase in its Standard Variable rate by 0.11% to 4.95%, despite there being no change to the Bank of England base rate and there’s nothing to stop other lenders doing the same.
Capped and fixed rates can give borrowers security against rate rises and these new deals from Coventry give added flexibility thanks to having no ERCs. This flexibility isn’t free and cheaper fixed rate deals are available, but many borrowers will be happy to pay a bit more not to be tied in.
Coventry’s capped tracker mortgages start at 2.75% (Bank base rate + 2.25%), capped at 3.75% until 31.12.14 with a £999 fee. The fixed rates start at 3.65% until 31.12.16 with a £999 fee – both of these are available up to 65% LTV.
It’s good to see Coventry taking positive action to help borrowers in what remains a constrained lending market. Anyone currently sitting on their lender’s Standard Variable Rate should review their mortgage now to see if they can save money by switching to a new deal.