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Leeds & Holbeck heads the mortgage pack

Leeds & Holbeck Building Society is taking advantage of the recent cut in interest rates to bring in the one-year fixed-rate mortgage.

Aimed at first-time buyers and people looking to remortgage, the product is fixed at 3.99 per cent for the first year for loans of up to 95 per cent of the value of the property.

Borrowers can get buildings and contents insurance and the mortgage comes with an arrangement fee of £199. If the mortgage is fully repaid during the life of the loan, the only redemption penalty is a flat administration fee of £50.

According to Moneyfacts, the Leeds & Holbeck product shares the lowest rate for a one-year fixed-rate mortgage with Northern Rock, both set at 3.99 per cent. The Northern Rock mortgage has an arrangement fee of £395 and also comes with free accident, sickness and unemployment insurance for the first six months. It is available for loans of up to 75 per cent of valuation.

However, the biggest difference between the two mortgages is their redemption fees. The Leeds & Holbeck product has a redemption penalty of £50, while the Northern Rock mortgage charges 2 per cent of the advance during the fixed-rate period. The Leeds & Holbeck mortgage also requires a smaller deposit of 5 per cent of the valuation price, compared to the 25 per cent deposit needed from Northern Rock.

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