Mercantile Building Society has introduced the 2.1 per cent discount mortgage.
The mortgage has a discount of 2.1 per cent for the first two years of the mortgage for loans of up to 80 per cent of valuation. This gives the mortgage a payable rate of 5.29 per cent. It is available to all borrowers.
The mortgage comes with free unemployment insurance for the first year of the loan. The only redemption charge is the remaining interest to the end of the month that the mortgage is redeemed.
Mercantiles mortgage is not the most competitive on the market at the moment. According to Moneyfacts on March 12, 2001 the 2.25 per cent mortgage from Dudley Building Society, available for loans of up to 80 per cent of valuation, is the cheapest two-year discounted mortgage. This comes with free accident, sickness and unemployment insurance for six months and has redemption charges of fourteen days interest.
Based on a £100,000 mortgage with a loan to value of 80 per cent, London & Country Mortgages says that monthly payments for the Mercantile mortgage would be £608.57 a month. The Dudley Building Society mortgage, on the other hand, would require payments of £584.59 a month.