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Pink plays safe with five-year fix

Pink Home Loans has introduced a five-year fixed rate mortgage that is available to all borrowers for loans of up to 95 per cent of valuation.

The mortgage has a fixed rate of 5.99 per cent and has a maximum loan of 95 per cent of valuation. Borrowers who pay the mortgage off during the fixed rate period must pay 7 per cent of the sum repaid in year one, 6 per cent in years two and three and 5 per cent in years four and five as an early redemption penalty.

A mortgage indemnity guarantee (MIG) is payable on loans above 85 per cent of valuation and the rate for this is 7.25 per cent on loans from 85 to 90 per cent of valuation. The rate is 8.65 per cent on loans from 90.01 to 95 per cent.

According to Moneyfacts on August 13, 2001, Leeds & Holbeck has a five-year fixed rate mortgage available for loans of up to 95 per cent of valuation, but it has a more competitive fixed rate at 5.69 per cent until November 1, 2006. Borrowers who redeem this mortgage during the fixed rate period must pay six months&#39 interest in the first three years and three months&#39 interest in years four and five.

A MIG is payable on loans above 90 per cent of valuation at the rate of 8.95 per cent. This is a higher rate than Pink Home Loans, but the positive side is that is does not apply to borrowers with loans under 90 per cent of valuation.

A borrower with a 90 per cent mortgage on a property worth £100,000 would pay no MIG with Leeds & Holbeck, but would pay £1, 087.50 with Pink Home Loans.

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