Ipswich Building Society has introduced a tracker mortgage that has redemption penalties in the first three years.
The mortgage remains at 0.75 per cent above the Bank of England base rate for the life of the loan, giving it a payable rate of 6.25 per cent. It is available for loans of up to 95 per cent of valuation.
Borrowers who redeem in the first three years must pay a redemption penalty of one month's interest. An arrangement fee of £295 is payable, but only for loans above 80 per cent of valuation. Unfortunately, this incentive is unlikely to benefit first-time buyers.
Figures from the Council of Mortgage Lenders show that in March 2001, first-time buyers borrowed an average of 80 per cent of the value of the property.
According to Moneyfacts on April 30, 2001, there are no exact comparisons to the Ipswich Building Society mortgage. However, borrowers taking out a base rate tracker from Portman Building Society will get an all-round better deal than with the Ipswich Building Society.
The Portman mortgage remains at the Bank of England base rate currently 5.50 per cent until June 1, 2003 and is then 0.75 per cent above the base rate for the mortgage term. It is available for loans of up to 95 per cent of valuation, but it is more competitive than the Ipswich Building Society mortgage in that there are no early redemption penalties. However, its arrangement fee is higher at £300.