Lambeth Building Society has brought in the two-year discounted mortgage for existing clients as well as people looking to feather their first nest.
Lambeth has set the interest rate at 2.21 per cent below its standard variable rate, which on April 27th was 7.25 per cent. The discount gives the mortgage a payable rate of 5.04 per cent for the first two years on loans of up to 95 per cent of valuation. After the discounted period the mortgage will revert back to the standard variable rate.
The mortgage has redemption penalties of five per cent of the advance for the first two years of the loan, with no penalties thereafter. But borrowers can pay off ten per cent of the original amount borrowed in the first two years without incurring any penalties. And there is an administration fee of £295.
The mortgage does not have the most competitive discounted rate on the market. According to Moneyfacts on April 27, 2001 this is the 2.25 per cent discount mortgage from the Progressive Building Society. It has a discount of 2.25 per cent, giving it a payable rate of 4.75 per cent, but only for loans of up to 75 per cent of valuation. The only redemption penalty that the Progressive mortgage has is a deeds fee of £60. But borrowers going for the Lambeth product must take compulsory buildings insurance.