National Counties Building Society has designed a stepped discount mortgage with a twist.
The two year stepped discount mortgage is available for loans of up to 80 per cent of valaution and has two remortgage options.
For house purchases and remortgages where the borrowers is prepared to pay an arrangement fee and meet all legal costs, there is an option called fees payable.
The fees payable option has a 2.25 per cent discount in the first year, giving a payable rate of 4.74 per cent. This is followed by a 1.25 per cent discount in the second year.
For remortgages only, where the borrower is prepared to take a lower discount, there is an option called fees paid. With this option, the arrangement fee is waived and legal fees are paid by the building society.
The fees paid option has a two per cent discount in the first year, giving a payable rate of 4.99 per cent. In the second year, there is a one per cent discount.
According to Moneyfacts on April 23, 2001, there are no similar mortgages available. This mortgage, particularly the fees paid version, could appeal to existing borrowers who are looking to remortgage at a better rate. The absence of redemption penalties would also appeal to them.
Figures from the Council of Mortgage Lenders show that remortgaging is going strong in 2001. The amount of remortgage business rose from £3bn in December 2000 to £3.5 billion by February 2001.