Called the Reward Mortgage, it has a guaranteed lifetime tracker rate of 1.24% above the Bank of England base rate1, with no booking fees or early redemption penalties.
Reward Mortgage customers will get back 1% of their outstanding mortgage balance every two years, which they can use to reduce the balance and pay the mortgage back earlier, or take as cash. This is the only mortgage on the market that rewards customers with a regular lump sum in cash. There are no booking fees and customers don't have to pay back any of the cash lump sums they have received should the mortgage be paid off early.
The Reward Mortgage is fully portable, which means the benefits are not lost if the customer moves home. If, in the future, they want to borrow more money for home improvements, they can take out a Reward Mortgage home improvement loan for the extra funds they need, which will also pay 1% cash back every two years.
Example
On a typical £100,000 repayment mortgage over 25 years, the total cash back payable would be over £7,000. Should the customer choose to pay the cash directly into the mortgage balance every two years and keep the mortgage payments the same, the mortgage could be paid off in 23 years, a saving of two years' mortgage repayments.
Ambrose McGinn, Director, Abbey for Intermediaries, said: "The Reward Mortgage will be ideal for IFAs with clients who want a competitive deal for the lifetime of their mortgage, with the added plus of getting something back.
"The Reward Mortgage is a genuinely new approach to rewarding loyalty. We think it’s a great new choice for people who don’t want the cost and bother or re-mortgaging every couple of years."
The launch of the Reward Mortgage is the second initiative Abbey has undertaken in recent months to help reward customers and retain them for longer. In December 2003, it launched a 'guaranteed deal for life' mortgage, where, in return for an upfront fee, customers pay just 0.50% above the Bank of England base rate for the life of the mortgage. The upfront fee has recently been reduced from £1,000 to £500. There are no penalties for early repayment.
Help with fees
Intermediaries offering the Reward Mortgage to first time buyers, people moving home and re-mortgage customers, can offer the option of having Abbey pay for their legal and valuation fees4, in return for paying a slightly higher mortgage interest rate. This option is clearly priced and if customers choose this option, the interest rate is increased by 0.10%, which means the mortgage rate will track the Bank of England base rate plus 1.34%. Customers taking this option will have to repay the cost of the legal and valuation fees if they redeem the mortgage in the first two years.
For more information on the Reward Mortgage and other products in the Abbey range, intermediaries should contact their regional sales office or visit www.abbeyforintermediaries.com.
