Principality Building Society has introduced the 5.89 per cent mortgage.
The mortgage has a discount of 1.06 per cent from the societys standard variable rate for the first five years of the loan, giving it a payable rate of 5.89 per cent for loans of up to 75 per cent of valuation.
Aimed at first time buyers and people wishing to remortgage their properties, the mortgage also offers £250 cashback. The redemption is charge is the recovery of the cashback during the discounted period.
The Principality mortgage is not the cheapest on the market. According to Moneyfacts on March 16, 2001, the cheapest five-year discounted mortgage on the market is the 1.6 per cent discount from Nottingham Building Society. This has a discount of 1.6 per cent for the first five years of the mortgage, giving it a payable rate of 5.64 per cent for loans of up to 75 per cent. The redemption charge is the recovery of the discount during the discounted term.
Based on a mortgage of £100,000 with a loan to value of 75 per cent, London & Country Mortgages says that monthly payments for the Principality 5.89 per cent mortgage would be £637.59. The Nottingham 1.6 per cent discount monthly payments would be £629.76.