Exclusive Connections has unveiled a flexible 100 per cent mortgage that has a 1 per cent discount for the first two years.
The mortgage has a current payable rate of 6 per cent and allows borrowers to overpay, underpay and take payment holidays. But they cannot make lump sum withdrawals.
Interest is calculated monthly and Exclusive Connections will lend an additional amount of up to 5 per cent of valuation for moving costs.
There is an extended tie in of one year, so borrowers who pay off the mortgage in the first three years must pay three months' interest as a penalty. The extended tie-in is the main drawback. Similar 100 per cent mortgages such as Northern Rock's together mortgage have no early redemption penalty, but the current payable rate is higher at 6.29 per cent.
According to Moneyfacts on August 9, 2001, Exclusive Connections is the least competitive mortgage of its type. The most competitive is from Private Label, which has a 2.01 per cent discount for two years, giving a current payable rate of 4.99 per cent.
Like the Exclusive Connections mortgage, borrowers who redeem in the first three years must pay three months' interest as a penalty and again up to 5 per cent of valuation is allowed for moving costs. It has the same flexible features as Exclusive Connections, but also allows borrowers to make lump sum withdrawals and interest is calculated on a daily basis. This shows it is more flexible than Exclusive Connections in addition to its more competitive rate.