Principality mortgage review: Key features, fees and latest interest rates - Money To The Masses (2024)

What is Principality Building Society?

Principality is the sixth largest building society in the UK, offering savings, investments, insurance and mortgages. As a building society it has members rather than customers and it doesn't have to consider the needs of shareholders. To date, it has 500,000 members and manages £10bn of assets.

In terms of its mortgage proposition, Principality has products for first-time buyers, movers and those remortgaging. It has fixed, tracker and discount-rate deals for both residential and buy-to-let mortgage borrowers. You can access the mortgage range directly online, over the phone or in branch, or it is also open via intermediaries. If you don't have an intermediary and would like the opportunity to get exclusive rates or incentives with Principality, we suggest online mortgage broker Habito*, which offers independent whole-of-market advice.

Principality mortgage key features

• The 16th largest lender in the UK, offering mainstream, prime mortgages
• Residential, buy-to-let and holiday-let products
• Fixed-rate, tracker-rate and discount mortgages for first-time buyers, movers and those remortgaging
• Some fee-free options available

Principality pros and cons

Pros

Cons

As Principality is a building society, it is run for the benefit of its members rather than shareholders, including offering voting privileges on some management decisions You can overpay by up to 10% of the mortgage balance each year without incurring an early repayment charge There are some fee-free options, although the interest rates are generally higher on those deals Prospective borrowers can deal with Principality directly rather than having to use an intermediary, as is the case with some other lenders

Principality is a prime lender and won't consider applicants with impaired credit history It doesn't provide much variety in the types of mortgages offers when compared with some of its competitors

What types of mortgage does Principality offer?

Principality has a range of residential, buy-to-let and holiday-let mortgages. There are 2, 3 and 5-year fixed rate deals, as well as tracker rates that follow the Bank of England base rate and discount mortgages, which track the lender's standard variable rate.

How much can I borrow with Principality?

As with all mortgage lenders, Principality is obligated to ensure the mortgages it provides are affordable for the borrower, both at the introductory rate and if interest rates were to rise by a significant amount in the future. To this end, Principality doesn't use a standard calculation based just on income but rather assesses each applicant's individual circ*mstances, including any existing credit agreements, day-to-day outgoings and income.

There is an online mortgage calculator on Principality's website which gives potential applicants a clearer idea of how much they are likely to be able to borrow, although this figure may change once a full application has been completed.

What is the maximum loan size and loan-to-value (LTV) with a Principality mortgage?

What interest rates does Principality charge?

As interest rates fluctuate, it is a good idea to scan the market for the best deals at the time you are making your mortgage application. At the time of writing, Principality has the following rates available:

• 2-year fixed rate up to 85% LTV at 5.65% with a product fee of £895
• 5-year fixed rate up to 90% LTV at 5.35% with a product fee of £1,395
• 2-year fixed rate buy-to-let up to 60% LTV at 5.70% with a product fee of £895

At the end of the introductory period, some deals revert to the lender's SVR of 5.15%, while some borrowers have a further year at the SVR minus a set percentage.

How long does it take to get a mortgage offer from Principality?

According to the most recent data provided by the building society, the average time it took for Principality to issue a mortgage offer after receiving a mortgage application was 14 days in June 2022. The amount of time it takes to process an application will vary depending on the time of year and how many applications the lender has received.

What fees does Principality charge for its mortgages?

In addition to the charges home buyers will have to pay to a solicitor for conveyancing, there are also typically fees associated with the mortgage too. In the case of Principality, the main fees payable are product fees for the mortgage itself and valuation fees to assess whether the property is worth the loan amount. For the latter, some mortgages in the Principality range offer a free valuation and for those that don't, the cost is on a sliding scale depending on the asking price for the property. For a property worth up to £50,000, the valuation is £230, going up to £730 for a property worth £1m.

With the product fee, there is the option to go for a fee-free option with a slightly higher interest rate, or, alternatively, there are deals with charges of up to £1,395. This fee can be added on to the mortgage rather than having to pay it upfront, although you will end up paying interest at the same rate as the mortgage if you decide to do that.

Can you make overpayments on your Principality mortgage?

Unless you have a flexible mortgage, there is a limit on the amount you can overpay your Principality mortgage by without having to pay an early repayment charge. The current allowance is 10% of the outstanding balance per calendar year, either made as a lump sum or as regular payments.

Principality early repayment charges

What is the maximum mortgage term with Principality?

The longest term you can take out a Principality mortgage over is 40 years for a standard repayment deal. However, if the loan is interest-only, the maximum term is 25 years. The loan must be repaid by the oldest applicant's 85th birthday, which means you would have to take out the mortgage by the time you are 45 to benefit from the longest possible mortgage term. It is worth noting that the longer the term, the more you will end up repaying in total because of the interest payable.

What credit reference agency does Principality use for its mortgages?

When you take out a mortgage or other credit product, the prospective lender will run a check on your credit file with one or more of the main credit reference agencies, Experian, Equifax and TransUnion. In the case of Principality, it potentially checks all three when assessing mortgage applications. This means it is a good idea to look at your full reports and ratings with each of the agencies to ensure there aren't any errors or out-of-date information that is dragging your credit score down. You can use ClearScore(Equifax), MSM Credit Monitor(TransUnion) and Experian to do this.

Does Principality offer mortgages to people with bad credit?

Principality is a prime mortgage lender and, as such, doesn't consider lending to people with impaired credit. Applications where one or more of the applicants has a history of bad credit are likely to be turned down, this includes:

• 1 or more CCJs with a total value of more than £500 in the last 6 years
• 1 or more delinquent accounts with a value greater than £500 within the last 6 years
• Overdue payments equivalent to 3 months repayments on a mortgage or secured or unsecured loan in the last 2 years
• An IVA, bankruptcy or DMP within the last 6 years

Principality mortgage customer reviews

Principality Building Society scores 2.3 out of 5.0 on the customer review site Trustpilot, with 27% rating it as "Excellent", while 60% thought it was "Bad". Both the positive and negative reviews were mainly based on customer service experiences although, with only around 80 reviews, it doesn't give conclusive evidence of people's overall experience. Moreover, the reviews are for Principality as a whole rather than the mortgage business in particular.

Summary

Principality is a solid mortgage lender with some competitive rates across its range of products. It doesn't have as much variety in its offering compared to some of its rivals, although the holiday-let deals will be appealing to some borrowers. If you have a poor credit history, Principality isn't for you, but if you are looking for a mainstream lender that you can deal with directly, it may be a good option to consider.

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