The self-certification market is the target for the 3.99 per cent fixed-rate mortgage from Mortgage 2000.
The mortgage is fixed at 3.99 per cent until January 1, 2004 and is available to both first-time buyers and people looking to remortgage. It is funded by Verso. After the fixed-rate period the mortgage will revert to a rate of 1.98 per cent above the Bank of England base rate.
Loans are available for up to 85 per cent of the value of the property, with a maximum amount of £300,000. Borrowers who can put down a larger deposit can benefit from a larger maximum loan limit of £500,000 for loans of up to 75 per cent of the value of the property.
The mortgage has an arrangement fee of £395. If it is redeemed in the first five years then borrower will have to pay a fee of 5 per cent of the advance.
The Mortgage 2000 product is not the most competitive self-cert two-year fixed-rate mortgage on the market. According to Moneyfacts on November 2, 2001, the lowest rate on the market is from Northern Rock. This has a fixed-rate of 2.69 per cent until January 1, 2004 for loans of up to 60 per cent of valuation.
The Northern Rock mortgage has a maximum loan limit of £500,000 and reverts to a rate of 1.99 per cent above the Bank of England base rate after the fixed-rate period. It has redemption penalties of 4 per cent in the first year, 8 per cent in the second year, 6 per cent in the third year, 4 per cent in the fourth year, 2 per cent in the fifth year and 1 per cent in the sixth year.
Comparing the redemption penalties for the first year based on a loan of £100,000, according to mortgage IFA company Kingdom Asset Management, the Mortgage 2000 product would cost £4,250 and the Northern Rock mortgage would cost £2,400.