Furness Building Society has introduced a five-year fixed rate mortgage that is available for loans of up to 80 per cent of valuation.
The mortgage is fixed at 5.74 per cent until July 7, 2006 and the maximum loan is £150,000. An early redemption penalty of 5 per cent of the loan is payable during the fixed rate period.
According to Moneyfacts on July 30, 2001, this mortgage has the most competitive rate for mortgages of this type. The closest competition is from Dudley Building Society, which has a fixed rate of 5.75 until May 31, 2006. It is also available for loans of up to 80 per cent of valuation, but allows borrowers a higher maximum loan of £250,000. If the mortgage is redeemed during the fixed rate period, borrowers must pay a higher six months' interest penalty.
Dudley offers free accident, sickness and unemployment insurance, which some borrowers may find useful.
A recent survey conducted by NOP Financial on behalf of the Association of British Insurers showed that borrowers are unaware of the risks they face if they do not have ASU cover. One in five borrowers believe that the State will provide a safety net if they cannot meet their mortgage repayments due to the inability to work.
A third of homeowners without ASU cover feel they can rely on their savings, which suggests that borrowers are unlikely to be swayed by free ASU when comparing mortgages.