Coventry Building Society Capped Tracker Mortgage

by Peter Jacobs

A new mortgage product launched by the Coventry Building Society aims to have the best of both worlds offering a tracker product with a capped rate. With almost all experts suggesting that interest rates will rise from the historic 0.5% lows the UK has been enjoying for the past couple of years many people are thinking about fixed rate mortgages. But this new Coventry Building Society product offers a tracker rate mortgage with a capped rate for nearly 2 years.

Product Details at a Glance

Here are the main features of this combined tracker and capped rate mortgage product from the Coventry Building Society.

• Bank of England base rate plus 2.49%
• Current rate is therefore 2.99% (0.5% plus 2.49%)
• Capped rate of 3.99% means you won’t pay higher than 3.99% under the term of the deal rate
• Deal until 30th June 2012
• At the end of the deal the mortgage will lapse on the standard variable rate for the Coventry (they call this the privilege rate) at 4.49% – one of the highest in the industry
• Booking fee of £199 paid on application
• Arrangement fee of £800 which can be added to the mortgage loan
• Maximum loan to value (LTV) of 65%
• Early repayment charges of 4% during the deal period
• Can repay up to 5% of the loan without early redemption charges
• Includes one free mortgage valuation report up to a value of £650

About this mortgage product

A word from the people at the Coventry Building Society Colin Franklin, sales and marketing director at Coventry, said: “For those wishing to take advantage of low interest rates and protect themselves in future, our capped base rate tracker mortgage is perfect.”

And in reality this is exactly what it is trying to achieve. Although fixed rate mortgage interest rates are at some very low levels and not many people are taking out these products, if you don’t want to fix your interest rates for a long period of time then this may be one way to keep a tracker rate whilst protecting yourself against interest rates rising, at least until June 2012 which is over 2 years way.

The only drawback we can see is the low loan to value percentage at just 65% which not many people will fall into. The fees being charged are around average for mortgages in the UK although the standard variable rate charged once the deal period has completed is much higher than average. For example the current SVR for Barclays is 2.49% and the Halifax 3.5% so it’s wise to take this into consideration if you are thinking of taking out this capped rate tracker mortgage with the Coventry Building Society. In any case you should seek professional advice when choosing a mortgage loan.

About The Coventry

The Coventry Building Society is to merge with the Stroud and Swindon Building Society under one brand in the current year which will see the latter organisation be taken into the Coventry brand under one name. They are currently the third largest building society in the UK by asset value.

Story link - Coventry Building Society Capped Tracker Mortgage

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