Ipswich Building Society has introduced a three-year fixed rate mortgage that is available for loans of up to 80 per cent of valuation.
The mortgage has a fixed rate of 5.75 per cent until October 31, 2004. Borrowers who redeem the mortgage during the fixed rate period must pay 2.5 per cent of the original advance. Interest is calculated on a daily basis and there is an application fee of £295.
Figures from the Council of Mortgage Lenders show that borrowers are borrowing less than last year. In April 2001, first-time buyers borrowed an average of 78 per cent of the property value compared to 80 per cent in April 2000. Existing homeowners borrowed 64 per cent in April 2001 and 66 per cent in April the previous year.
According to Moneyfacts on June 19, 2001, the Marsden Building Society has a three-year fixed rate for loans of up to 80 per cent of valuation.The Marsden mortgage is fixed at 5.45 per cent until April 30, 2004 and also has an arrangement fee of £295.
Borrowers who redeem their mortgage early pay a less with the Ipswich mortgage in year one as 3 per cent of the original advance is payable under the Marsden mortgage.
However, in years two and three, borrowers with the Marsden pay 2 per cent and 1 per cent of the original advance respectively, which is lower than the penalty imposed by Ipswich Building Society for the same period.