Northern Rock has introduced a flexible mortgage that has a fixed rate for seven years.
The seven year flexi fixed mortgage is available for loans of up to 95 per cent of valuation and has a fixed rate of 5.99 per cent until July 1, 2008.
It is fully flexible as overpayments, underpayments, payment holidays and lump sum withdrawals. Interest is calculated on a daily basis.
Borrowers who redeem in the first seven years must pay an early redemption penalty of two per cent of the advance. As an added incentive, mortgage payment protection insurance is provided free for the first six months.
According to Moneyfacts on April 11, 2001, this mortgage is the only seven year flexible fixed rate mortgage available at the moment. despite the lack of competition, the mortgage still offers borrowers a good deal as seven year fixed rates that are not flexible have similar rates. For example, Birmingham Midshires allows borrowers to fix their mortgage term between one and 10 years at 5.65 per cent.
The Northern Rock mortgage provides borrowers with long term security and flexibility. The early redemption penalty is the only downside of this mortgage, but even that is reasonable. Some mortgages apply redemption penalties where borrowers overpay more than 10 per cent of their mortgage. Northern Rock's redemption penalty only applies if borrowers repay the original advance.