Principality Building Society is stepping lower with the introduction of the stepped rate discount mortgage.
Aimed at first time buyers and people looking to remortgage, the mortgage has an initial discount of 2.66 per cent for the first year of the loan, giving it a payable rate of 3.79 per cent for loans of up to 75 per cent of valuation. The discount then steps to 1.66 per cent for the second year and then 0.66 per cent for the next three years.
The mortgage has redemption penalties of three per cent of the advance during the discounted period, and if the companys building and contents insurance is not taken then an additional 0.19 per cent is added to the interest rate.
According to Moneyfacts the Principality mortgage is the most competitive five-year stepped rate discount mortgage on the market on May 25, 2001. The next most competitive is the stepped rate tracker mortgage from Melton Mowbray Building Society, which has a stepped discount rate of 3 per cent for the first year, giving it a rate of 3.89 per cent for loans of up to 75 per cent of valuation. It then has a discount of 2 per cent in year two, 1 per cent in year three, 0.5 per cent in year four and 0.25 per cent in year five. Redemption penalties are six per cent of advance in the first three years, followed by 3 per cent in the next two years.
According to London & Country Mortgages, monthly premiums for a £100,000 mortgage for a loan to value of 75 per cent for the Principality mortgage come to £516.31. Monthly payments for the Melton Mowbray mortgage come to £521.78.