BACKGROUND. ----------- Abbey national is a High street bank converted from a building society. They provide similar products to all other major banks but are'nt as competitive. The only product that seems to be competitive is their mortgage for which they have been awarded twice by Your mortgage magazine. In 1998 Abbey National launched their Internet bank "Cahoot" now hugely successful initially provided credit cards although now they also offer current accounts, loans & savings.
MY EXPERIENCE. ------------- My own experience with Abbey National has been relation to having held their mortgage account for four years. Although not a flexible mortgage (for which I would have to pay additional charges), The mortgage is a repayment mortgage capped at 6.55% meaning if the SVR (standard Variable Rate) for Abbey national reduces below 6.55% so will my mortgage interest rate, but if the rates were to rise there will be no change to my payments i.e. the rate will remain at 6.55%.
I am tied into the Mortgage for a whooping 7 years of which 3 remain. Being tied into the mortgage has not changed the fact that I could use many features otherwise associated with a Flexible mortgages & the added benefit is that I avoid paying the high arrangement fees & generally high interet rates associated with flexible mortgages.
The features Abbey National offer with their standard mortgage include the ability to make additonal lump sum payments of up to 10% of the mortgage amount in any one year, the minimum payment they accept is £1000.
The term of the mortgage can be reduced free of charge, I personally reduced my otherwise standard 25 year mortgage to 15 years which resulted in a small increase in my payments which was affordable but saved thousands in the process. But if my circumstances were to change i could easily revert back to the 25 years or whichever term I preferred again free of charge.
Flexible mortgaes allow the borrower to withdraw fundsfrom the mortgage this idea does not appeal to me as I would probably end up spending more then usual but if my circumstances were to change & i did want to take an additional loan I could borrow further although only applicabale for home improvements.
Overall I am quiet satisfied with my the mortgage & the Abbey National as i have always been given prompt advice & information when i have needed to contact them in relation to my mortgage.
Finally i'd like to add that although standard mortgages maybe able to include some of the advantages which but there are downsides for example many standard mortgages charge interest monthly or yearly which result in paying slightly more but just about all flexible mortgages charge interest daily hence a slight reduction, it's worth mentioning though that this only makes a slight difference.
Before choosing either mortgae circumstances need to be fully considered. For example the money saved by having a flexible mortgages may outweigh the charges involved, it's therefore worth enquiring what the standard mortgages offer in comparison to the flexible mortgage & weather you would really use all or most of the features associated with the flexible mortgage.
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Excellent, informative op. Personally, I would be wary of a 7 year commitment to any mortgage product (unless the rate was ridiculously low). My own preference is a capped rate, but that is mainly due to having suffered during the double figure interest years at the end of the 80s. Showing my age now ;)
Versatile 07.09.2001 07:16
A fine opinion ~ Thanks Versatile :O)
Asif 05.09.2001 01:34
Seven years is a long commitment...if you want to break out early there will be a heavy penalty. However, good capped rate and with interest rates tipped to drop some more - you could be quids in. Great OP. Rgds, Asif
Sep 4th, 2001
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