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Legal & General offers 100 per cent mortgage

Legal & General has joined the small number of lenders offering 100 per cent mortgages.

The 100 per cent low start discount mortgage has been designed with the first time homeowner in mind and has a two stage stepped discount. The mortgage will have a 5.25 per cent discount until November 1, 2001, giving it a payable rate of 2.99 per cent. After this, the mortgage has a 0.75 per cent discount until May 1, 2004. It is available on an interest only or repayment basis.

Interest is calculated daily and the mortgage has redemption penalties of three per cent of the advance until the end of the final discount period. Borrowers must have life assurance, though not necessarily from Legal & General. The product also has a mortgage indemnity guarantee (MIG) premium based on 12 per cent of the advance, payable on completion.

The 100 per cent low start discount mortgage is the most competitive three-year discounted rate 100 per cent mortgage on the market at the moment. According to Moneyfacts, the next most competitive three-year discounted rate 100 per cent mortgage is the 5.69 per cent mortgage from Pink Home Loans.

The Pink Home Loans mortgage has a 2.3 per cent discount until May 1, 2002, followed by a one per cent discount until May 1, 2004. It also has redemption penalties of three per cent of the advance for the discounted term. There is also a 12 per cent MIG premium, payable on completion, but this mortgage is available on an interest only and repayment basis, with no need for life cover.

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