Legal & General Bank has followed up on the recent 0.25 per cent cut in the Bank of England base rate by bringing in the flexible reserve mortgage.
The mortgage will have a discount of 0.5 per cent for the first two years of the mortgage for loans of up to 75 per cent of valuation, giving it a payable rate of 5.6 per cent. At the end of the discounted period the mortgage will revert to Legal & General Banks standard variable rate, which on May 21, 2001 was set at 6.1 per cent.
Legal & General Bank has also made the mortgage fully flexible, as it offers underpayments, overpayments, payment holidays, lump sum withdrawals and interest is calculated daily. There are no redemption penalties.
According to Moneyfacts the Legal & General Bank is the joint most competitive two-year discounted flexible mortgage. Its only competitor is the flexible mortgage from Britannic Building Society. This too has a rate of 5.6 per cent for the first two years of the mortgage for loans of up to 85 per cent of valuation, is fully flexible and has no redemption penalties. However, unlike the Legal & General product the Britannic mortgage refunds any legal fees.