Pink Home Loans has introduced a two-year fixed rate mortgage that has an extended tie-in for three years.
The mortgage is open to all borrowers for loans of up to 95 per cent of valuation. It is fixed at 4.75 per cent for two years and borrowers who pay off the mortgage during the first three years must pay an early redemption penalty. This decreases from 5 per cent of the amount repaid in the first two years to 4 per cent in years three and four, then 3 per cent in year five.
Some borrowers may prefer to go for a deal with a higher rate and no extended redemption penalty, such as Britannia Building Society's two-year fixed rate at 5.19 per cent. Borrowers pay a penalty of 180 days' interest if they pay off the mortgage during the first two years.
For those who are more concerned about getting a low fixed rate, Shepshed Building Society has a similar mortgage to Pink Home Loans which is more competitive. According to Moneyfacts on August 15, 2001, the Shepshed Building Society's deal is available to all borrowers for loans of up to 95 per cent of valuation and is fixed at 3.99 per cent for the first two years.
However, borrowers who pay the mortgage off during the first five years pay a flat penalty of 6 per cent of the original loan, which is higher than Pink Home Loans.