Pink Home Loans has brought in the 2.25 per cent discounted mortgage.
The mortgage is aimed at first time buyers and people who want to remortgage their properties. The discount of 2.25 per cent for the first two years of the mortgage gives it a payable rate of 5.49 per cent for loans up to 95 per cent of valuation.
With income multiples of 3.5 times principal income plus second, this gives it an edge compared to the industry norm for this type of mortgage of three times principal income plus second.
However the mortgage also has redemption penalties that extend beyond the discounted period for a further two years. Also, looking at other mortgages available on the market, it is not that competitive.
According to Moneyfacts the cheapest two-year discounted mortgage on November 21, 2000 is the 3.66 per cent discount mortgage from Scarborough Building Society, which has a payable rate of 3.99 per cent, although it has redemption penalties for three years after its discounted period.