Tyneside-based Mercantile Building Society has brought in the 1.85 per cent discounted mortgage.
Aimed at both first time buyers and people who are looking to remortgage, the mortgage has a discount of 1.85 per cent for the first three years of the loan, giving it a payable rate of 5.29 per cent for loans of up to 75 per cent of valuation.
The mortgage comes with £250 cashback for first time buyers along with a refund of up to £200 from the valuation fee. It comes with free unemployment cover for the first year of the mortgage. However borrowers will have to take out buildings and contents insurance from Mercantile. The redemption penalty is the repayment of the discount for the first three years of the mortgage.
Mercantiles mortgage is not the most competitive three-year discount mortgage on the market. According to Moneyfacts on May 2, 2001 this is the 1.85 per cent mortgage from Darlington Building Society. This has a discount of 1.85 per cent, giving it a payable rate of 5.14 per cent for loans of up to 90 per cent of valuation. This comes with a full refund on valuation fees and up to £300 towards any legal fees. It too comes with compulsory buildings and contents insurance, while the redemption penalty is six months' interest during the discount period.
Based on a £100,000 mortgage, London & Country Mortgages says that monthly payments for the Mercantile mortgage would be £608.57 a month. The Darlington mortgage monthly payments would be £599.29.