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N&P offers to sunny Spain

Norwich and Peterborough has introduced a five-year fixed-rate mortgage that is available for the purchase of properties in southern Spain.

The mortgage is aimed at UK expatriates who are living in Spain, people looking for a holiday home or thinking about retiring to the region.

It is available for loans of up to 75 per cent of valuation and is fixed at 5.99 per cent for five years. Borrowers who redeem the mortgage during the fixed-rate period must pay a penalty of six months&#39 interest. An arrangement fee of £250 is payable, but there is no compulsory insurance.

According to Moneyfacts on March 12, 2002, three other lenders offer mortgages for Spanish properties. However, Royal Bank of Scotland and Abbey National do not offer fixed rates, while Barclays Bank offers a tracker mortgage at 1.75 per cent above the 12-month Euribor. This is the rate at which European banks lend money to each other and it currently stands at 3.77 per cent, which gives a current payable rate of 5.52 per cent.

However, the Barclays Bank mortgage is restricted to loans of up to 60 per cent of valuation and, as a tracker, the rate borrowers pay is variable each year. But on the positive side, there is no redemption penalty.

Simon Conn, director of offshore IFA Conti Financial Services feels that Norwich & Peterborough&#39s ability to lend up to 75 per cent of valuation, combined with a reasonable fixed rate make this mortgage a worthwhile deal. However, he points out that it is restricted to southern Spain and not stretching to the north could be a drawback for some borrowers.

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