The Marketplace, the IFA division of Bradford and Bingley, has introduced a 2-year discounted rate flexible base rate tracker.
The mortgage is available to all borrowers for loans of up to 95 per cent of valuation and has a 2.5 discount from the standard variable rate for the first two years, giving a current payable rate of 3.25 per cent. After this period, it will revert to a tracker rate of 1.75 per cent above the base rate for the rest of the mortgage term.
The mortgage is fully flexible in that it allows overpayments, underpayments, payment holidays, lump sum withdrawals and the daily calculation of interest. Another strong feature is that no mortgage indemnity guarantee (MIG) is payable even on loans of 95 per cent of valuation.
However, this mortgage has an early redemption penalty during the discount period. Borrowers who pay off the mortgage during this time must pay three months interest and this is something that might put borrowers off as many are now trying to get the lowest rate they can without a tie-in.
According to Moneyfacts on November 14, 2001, this mortgage has the most competitive rate for deals of this type. Yorkshire Building Society is the closet competitor with a 0.25 per cent discount for the first two years. This gives a current payable rate of 3.75 per cent.
Yorkshire Building Society allows borrowers to overpay, underpay, take payment holidays and interest is calculated daily. But lump sum withdrawals are not allowed and a MIG is charged on loans above 90 per cent of valuation. However, its lack of a redemption penalty is favourable compared to The Marketplace's product.