Principality Building Society has brought in the 1.05 per cent base rate tracker flexible mortgage.
The mortgage tracks the Bank of England base rate, which is currently 5.75 per cent. For the first six months of the loan, until October 30, 2001 it will have a rate of 1.05 per cent discounted from the base rate, giving it a payable rate of 4.7 per cent. From November 1, 2001 to April 30, 2011, it will have a rate of 0.8 per cent above the base rate. It will be available for loans of up to 90 per cent of valuation.
The mortgage is flexible and offers the facility for overpayments, underpayments and payment holidays. Interest is calculated daily. There is no facility for lump sum withdrawal. The redemption charge is one per cent of the advance for the first year of the loan.
Looking at the discounted flexible mortgage market, the Principality mortgage is the cheapest. According to Moneyfacts on March 13, 2001, the next most competitive is the 4.99 per cent mortgage from the Alliance & Leicester. This has a discount of 0.76 per cent from the Bank of England base rate for one year. For the next ten years it has a rate of 0.95 per cent above the Bank of England base rate for loans of up to 90 per cent of valuation. It offers facilities for overpayments, underpayments, payment holidays and lump sum withdrawal. Interest is also calculated daily.