Portman Building Society has unveiled a two-year discounted rate mortgage that has no early redemption penalty at all.
Borrowers get a 0.75 per cent discount until October 3, 2001, giving a current payable rate of 5.65 per cent. This mortgage is available for loans of up to 95 per cent of valuation and the maximum loan is £500,000.
Figures from the Council of Mortgage Lenders show that 60 per cent of new mortgage business in 2000 was discounted rate business. This suggests the Portman mortgage is likely to be popular, especially as it allows borrowers to move to a better rate without penalty.
According to Moneyfacts on August 20, 2001, Britannia Building Society has a more competitive two-year discounted rate mortgage that also has no early redemption penalty. This mortgage has a 1.9 per cent discount for the first two years, giving a current payable rate of 4.74 per cent. It is available for loans up to 95 per cent of valuation with a maximum loan of £500,000. But unlike the Portman mortgage, it has an arrangement fee of £295.
Borrowers who are looking for a bigger discount in the first two years may prefer the Britannia Building Society mortgage over Portman Building Society. But the negative side of this is that there is a bigger jump from repayments made during the discount period to the standard variable rate after the first two years and this could hit some borrowers hard.