This mortgage comes with an initial rate of 6.09% which includes a 2.01% discount from our Standard Variable Rate for 5 years, followed by our Standard Variable Rate for the remainder of the term, currently 8.10%. The interest rate for this mortgage is ‘floored’, which means that while the rate may increase, it will never fall below 2.50%.
What are the key features of this product?
This is a variable rate mortgage product which means monthly payments can go up or down during the term of the discount period. This is different to a fixed rate product. The rate of interest is linked to the Society’s Standard Variable Rate (SVR) for mortgages. During the first 5 years, the interest rate charged will be 2.01% below the Society’s SVR – this is the discount period and rate.
The lowest interest rate you might pay during this period will be 2.50% which is called the “floored” rate. This means that if the Society’s SVR is below 4.51% at any time during the period of the product, you will not benefit from the full rate of discount of 2.01%.
Three months before this product ends, we will contact you with the options available. If you do nothing at the end of the product period, you will move to the Society’s SVR which may mean your payments increase.
This product is available on:
A Capital & Interest repayment basis. This means your monthly repayments will contribute to paying back the initial loan as well as the monthly interest on the remaining balance. Over time, this will mean the amount owed will reduce and the interest will also reduce.
An Interest-Only repayment basis. This means that your monthly repayments will only pay back the interest on your initial loan amount. The capital balance will not reduce. You will need to agree with us up front, a suitable method of repaying the initial loan at the end of the mortgage term.
This product is available for properties in England and Wales.
There is a £599 fee payable for setting up this mortgage.
This product is available for loans of at least £125,000 and up to £400,000.
The product requires a joint parental borrower.
If the proposed loan exceeds 80% of the property value (known as LTV), a parental helper is required to provide additional security.
This product requires the youngest borrower to be less than 30 years old at the time of application, be in full time education and have at least one year remaining on their university course.
This product comes with a free valuation of the helper's property being used as security.
Who is this product designed for?
This product is designed for customers who are students wanting a residential mortgage with support from a parental helper who:
are looking to purchase a property.
have little or no deposit.
have surplus monthly income to manage their finances if the Society’s SVR goes up which would mean an increase to the monthly repayment amount.
want the option of exiting the product without any additional fees or overpay their monthly mortgage payment without restriction.
Who is this product NOT intended for?
This product is not intended for customers who:
want or need the certainty of a fixed monthly repayment for the term of the product.
Does this product deliver "fair value" for customers?
Being a mutual building society, all our products are priced to balance the needs of our Member savers and borrowers and the Society’s operating costs to support the Society’s long-term future.
We support our mortgage customers by providing each applicant with a bespoke, personal, and individual approach. We largely deal with people whose circumstances do not fit into the standard requirements of automated decision-making processes used by larger lenders.
We believe this product represents fair value for the customers it was designed for considering the customer support provided before, during and after the application.
Initial Rate
6.09% which includes a 2.01% discount from our Standard Variable Rate for 5 years, followed by our Standard Variable Rate for the remainder of the term, currently 8.10%.
The interest rate for this mortgage is ‘floored’, which means that while the rate may increase, it will never fall below 2.50%.
Fee Details
£599 – This can be added to the loan on completion; however, this will result in interest being charged on it making the overall fee greater over the term of the mortgage.
Maximum LTV
100% - If over 80% LTV, then a parental helper is required to provide additional security. This can be done by depositing funds into a Vernon Savings Account or taking out a legal charge for the amount on the parental helper’s own property. If additional security is provided, then this must be equivalent to the amount of the loan that exceeds 75% of the value of the property being purchased.
Loan Size
Minimum £125,000 - Maximum £400,000
Maximum Mortgage Term
25 years
Portability
This mortgage product is portable to a new residential mortgage on a different property when the new mortgage is taken out simultaneously with the repayment of the existing mortgage. You would need to meet our credit and affordability requirements for the new mortgage, the new property would need to be acceptable to us, and approval of a new mortgage would be subject to our prevailing Lending Policy.
Repayment Method
Capital & Interest or Interest-Only*
*Conditions apply, please speak to us.
Incentives
This product comes with a free valuation on the parental helper’s property to be used for security.
If the parental helper deposits funds as security, the monies will be invested into a 35-Day Notice Account for the period of involvement with the mortgage and will receive interest associated with this account.
Restrictions
Lending restricted to England and Wales.
This product is available for purchases only.
Minimum property value of £125,000 is required.
If a legal charge is being taken over a parental helper’s property:
Minimum £100,000 valuation if a 1st charge is being taken (unmortgaged property).
Minimum £250,000 valuation if a 2nd charge is being taken (property mortgaged).
Parental joint borrower required.
Youngest borrower (student) to be less than 30 years old at application and in full-time education, with at least one year remaining on university course.
Maximum age at end of term is 75 or selected retirement date, whichever is earlier.
Early Repayment Charge Details
No early repayment charges apply to this mortgage.
Representative Example
A mortgage of £140,819.00 payable over 13 years, on an interest-only repayment basis, with an initial discounted rate of 6.09%, which includes a 2.01% discount from our Standard Variable Rate (SVR) for 5 years and then on our SVR, currently 8.10%, for the remaining 8 years. The initial term would require 60 monthly payments of £714.66, followed by 96 monthly payments of £950.53.
The total amount payable would be £276,123.48, made up of the loan amount (£140,819.00), plus interest (£134,130.48), Arrangement Fee (£599), Standard Valuation Fee (£205), Solicitor Fee (£250), Funds Transfer Fee (£20), and a Mortgage Exit Fee (£100).
The overall cost for comparison is 7.40% APRC.
This information may not be representative of your personal circumstances and your payments may differ from this. Representative data as of 1st January 2023.
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