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Forty-year hitch on discount mortgage

Independent Mortgage Collection has launched a new mortgage with a discount which it claims is worth up to 40 per cent off the lender&#39s standard variable rate.

But the loan would have to run for 40 years to feel the maximum benefit of the discount which is applied at 1 per cent a year for the full term.

The current rate is 6.78 per cent. The lender Verso guarantees the standard variable rate will not exceed the Bank of England base rate plus a set margin of 1.99 per cent for the term. Interest is charged on a daily basis.

The mortgage is available for loans to value of between 75 and 95 per cent, depending on the size of the loan. Minimum loan is £25,001 and maximum £5m. There is no arrangement fee and no redemption penalties.

IMC chief executive Simon Knight says: “We have seen recently the launch of a 25-year capped-rate mortgage which sold out very quickly. This clearly shows significant demand is out there for longer-term mortgages.”

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