National Counties Building Society has introduced the three-year discounted & capped rate mortgage.
Aimed at first time buyers and people who are looking to remortgage, the mortgage is capped for three years at 5.69 per cent for loans up to 80 per cent of valuation. At the same time it also has a discount of 1.5 per cent from the societies standard variable, allowing the mortgage rate to go below the capped rate level, but not above it.
The mortgage also has early redemption fees of three per cent of the advance in the first three years of the loan but redemption penalties do not extend beyond this period.
The mortgage also has the option to reduce the amount of capital by up to 10 per cent a year without penalty.
According to Moneyfacts the National Counties three-year discounted & capped is the cheapest on the market in terms of interest rate and redemption penalties on November 10, 2000. It also has no MIP. The next two cheapest are the 5.75 per cent three-year capped rate mortgage from Dunfermline Building Society, which has redemption penalties of four per cent of the advance in the first four years of the loan, and the 5.79 per cent capped rate mortgage from Yorkshire Building Society which has redemption penalties of five per cent of the advance in the first three years of the loan.