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Principality cuts discount rate

Principality Building Society has introduced the 1.2 per cent discount mortgage.

Aimed at first time buyers and people who are looking to remortgage, the mortgage has a discount of 1.2 per cent from the society’s standard variable rate, giving it a payable rate of 6.29 per cent for the first five years of the loan.

The income multiples of 3.5 times principal income plus second are higher than the market norm of three times income plus second, up to £250 cashback is available, the redemption penalty is repayment of the cashback and there are no extended redemption penalties.

But the mortgage is not the most competitive on the market. According to Moneyfacts on December 1, 2000 the lowest rate for a five-year discounted mortgage for loans up to 95 per cent of valuation is the five per cent discount mortgage from the Scarborough Building Society.

However the Scarborough mortgage has a higher redemption penalty of 5.3 per cent of the amount repaid in the first five years, then one month’s interest thereafter.

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