Exclusive Connections has unveiled a five-year fixed rate tracker mortgage that is available for loans of up to 95 per cent of valuation.
The mortgage is fixed at 5.99 per cent for the first five years and if borrowers pay the mortgage off during this period, must pay 7 per cent of the sum repaid in year one, 6 per cent in years two and three and 5 per cent in years four and five. After the fixed rate period, it tracks at 1.75 per cent above the Bank of England base rate for the rest of the mortgage term.
According to Moneyfacts on August 17, 2001, this is the most competitive five-year fixed rate tracker mortgage for loans of up to 95 per cent of valuation. The closest comparison is from Abbey National, which is fixed at 6.29 per cent until September 2, 2006.
After the fixed-rate period, this mortgage tracks at 0.9 per cent above the base rate for the rest of the mortgage term, which is a more competitive tracker rate than Exclusive Connections.
Borrowers who pay off the Abbey National mortgage before this date pay a flat penalty of 260 days' interest, which is lower than Exclusive Connections. The redemption penalties on a £100,000 repayment mortgage in the first five years translate to between £5,000 and £7,000 with Exclusive Connections and £4,480 with Abbey National.
Some borrowers may prefer Exclusive Connections for its more competitive fixed rate. Others may not be swayed by this and may choose Abbey National for its lower redemption penalty and more competitive tracker rate after the first five years.