Marsden Building Society has designed a four year capped rate mortgage that is available for loans of up to 90 per cent of valuation.
The mortgage has a capped rate of 5.99 per cent until June 30, 2005 and an arrangement fee of £295 must be paid.
If borrowers redeem in the first four years, they must pay an early redemption penalty. Borrowers must pay four per cent of the advance if they redeem in the first year. This reduced by one per cent each year, so that borrowers who redeem in year four will pay one per cent of the advance.
According to Moneyfacts on April 23, 2001, Cheltenham & Gloucester has a similar mortgage that is available for loans of up to 90 per cent of valuation. It is capped at 5.99 per cent until June 30, 2005 and has a lower arrangement fee at £199 than the Marsden Building Society.
Borrowers who redeem the Cheltenham & Gloucester mortgage early must pay four per cent of the sum repaid in the first year. This decreases by one per cent each year, until the fourth year when the penalty is one per cent of the amount repaid.
Borrowers who want to pay some of their mortgage off instead of paying back the whole amount of the loan would pay a lower redemption penalty with the Cheltenham & Gloucester mortgage compared to the Marsden Building Society mortgage.