Northern Rock has filled a new niche in the mortgage market.
The seven-year flexi mortgage is one of only two flexible mortgages that have a fixed-rate for the first seven years of the loan. It has a fixed-rate of 5.79 per cent for loans of up to 90 per cent of the value of the property.
It is fully flexible and offers overpayments, underpayments, income drawdown and payments holidays. Interest is calculated daily. If the mortgage is held by the customer beyond the fixed-rate period then they get a loyalty bonus of at least 0.25 per cent off the standard variable rate.
Clients looking to remortgage their property can get free legal advice if they use a Northern Rock solicitor. If they choose not to, Northern Rock will make a contribution of £150 in England and Wales, or £250 in Scotland, towards the legal costs. First-time buyers can get £200 contributed to any legal bills and the mortgage comes with free accident, sickness and unemployment cover.
If the mortgage is redeemed in the fixed-rate period then the client will have to pay a redemption fee of 2 per cent of the advance.
According to Moneyfacts the other flexible fixed-rate mortgage with a similar term is also from Northern Rock and has been introduced at the same time. This has a fixed rate of 5.99 per cent for loans of up to 95 per cent of valuation and also has the same features as the 5.79 per cent mortgage.