Available immediately, the ‘Fix and Flex’ mortgage is a long-term flexible deal which allows customers to fix at the start of the mortgage, then revert to a competitive variable rate for the remainder of the mortgage term.
Customers can choose whether they want to fix for 6 or 12 months (at 6.09 per cent or 6.14 per cent respectively). When the fixed period ends, the rate reverts to 0.49 per cent above the Bank of England base rate for the lifetime of the mortgage.
When it comes to the fees, Abbey is putting a price on its mortgage fees, rather than sticking to a percentage based one. This means that many borrowers may wince at a figure which at face value looks shockingly high, however it could actually prove to be lower than if they were working on an apparently more pain-free percentage rate.
Louise Cuming, head of mortgages at moneysupermarket.com, said: “Abbey is breaking new territory in terms of fixed fees. For mortgages over £500,000 you would just get £1 change from £10,000 - although this fee might seem mouth-wateringly high at first glance, the fact it is fixed makes it wholly transparent, and sometimes less expensive than a percentage based fee.
“Abbey should be congratulated for being open about the fees it charges. Most lenders ‘mask’ high fees by quoting percentage rates. When looked at in percentage terms the Abbey deal represents a two per cent fee on a £500,000 mortgage and a 1.33 per cent fee on the maximum mortgage of £750,000.
"This starts to look like a reasonable deal when compared with other products on the market such as Northern Rock which charges a 3.5 per cent fee for its fixed rate deal. This works out as a whopping £26,250 fee for £750,000 mortgage. It is also worth highlighting the borrowing limit set for this offer of £750,000 - yet another indication lenders want to steer clear of riskier lending such as much larger loans while the credit crunch plays out.”
Benefits of the ‘Fix and Flex’ product are:
- Offset against savings, which means you pay your mortgage off earlier
- Can make overpayments to reduce your monthly payments
- Can make underpayments and take payment holidays to suit your lifestyle
- Available on repayment basis, interest only or a combination of the two
- Eliminates the hassle and cost of having to remortgage frequently
- Can be fixed for 6 to 12 months at the start of the mortgage
- By offsetting the savings against the mortgage, you do not pay income tax on them
