The Principality Building Society has introduced the 5.95 per cent fixed rate mortgage.
The mortgage has a fixed rate of 5.95 per cent for loans of up to 95 per cent of valuation for the first three years of the loan. The product is available for both first time buyers and people looking to remortgage, although remortgagers can only take out loans of up to 90 per cent of valuation.
Borrowers can have a free valuation report but the product also comes with compulsory buildings and contents insurance. If they refuse to take the insurance, then an extra 0.19 per cent is added to the interest rate. The mortgage has a redemption penalty of 2.5 per cent of the advance for the fixed rate period.
Looking at the other products that are available on the market, the Principality product is not the most competitive three-year fixed-rate mortgage. Darlington Building Society has a fixed rate of 5.24 per cent for the first three years for loans of up to 90 per cent of valuation. The redemption penalty is six months interest in the fixed rate period. The Darlington mortgage also offers a free valuation report, along with compulsory building and contents assurance. If the insurance is not taken then an extra 0.5 per cent is added to the interest rate. Unlike the Principality mortgage however, the Darlington mortgage is not portable.
Based on a £100,000 mortgage, London & Country Mortgages says that monthly payments for the Principality mortgage would be £641.25 a month. The Darlington mortgage monthly payments would be £605.57.