Principality has revamped its switch and save remortgage, which has a stepped discount over the first five years
A 1.66 per cent discount is offered until February 28, 2003, giving a payable rate of 4.79 per cent. A 0.66 per cent discount is then offered until August 31, 2006, giving a payable rate of 5.79 per cent.
It is available for loans of up to 90 per cent of valuation and borrowers who redeem in the first five years must pay three per cent of the advance.
Figures from the Council of Mortgage Lenders show the level of remortgaging was 34 per cent in the first quarter of 2000 – almost double the level of 18 per cent in 1994. This increase may be attributed to consumers' greater awareness of how they can save or raise money through remorgaging.
According to Moneyfacts on May 17, 2001, Scarborough Building Society has a similar mortgage for loans up to 90 per cent of valuation. The payable rate is 4.74 per cent which is slightly lower than the Principality mortgage. However, the Scarborough mortgage interest rate increases after one year to 6.24 per cent. Borrowers with the Principality remortgage would pay a lower rate than those with the Scarborough mortgage for four years out of the five-year discount period.
The Scarborough mortgage also has a higher redemption penalty compared to the Principality mortgage at five per cent of the advance plus one month's interest.