Principality Building Society has brought in an eight-year tracker flexible mortgage.
The mortgage will track the Bank of England base rate for the first eight years of the mortgage, with the interest rate set at 0.8 per cent above the base rate for loans of up to a maximum of 90 per cent of valuation. This gives it a current payable rate of 6.05 per cent.
Principality has made the mortgage fully flexible, as it offers payment holidays, underpayments, overpayments, lump sum withdrawals and daily interest. The mortgage also has a redemption penalty of one per cent of the advance for the first six years of the loan. Valuation fees are free if borrowers choose the Principalitys basic valuation, while legal fees are paid for borrowers who are remortgaging their properties.
Bank of England tracker mortgages have seen interest rates falling from 6 per cent in January 2001 to 5.25 per cent in May 2001. However despite calls for more cuts to avoid a recession, the Bank of England has left rates at the same level for two months in a row. Should the British economy slip into recession, then interest rates could start to climb again.
According to Moneyfacts the most competitive eight-year tracker rate mortgage is also from the Principality. This has a rate of 0.61 per cent above the Bank of England base rate, giving it a payable rate of 5.86 per cent for loans of up to a maximum of 90 per cent of valuation. This mortgage is also fully flexible and offers free valuation fees. But unlike the other Principality mortgage, the 5.86 per cent mortgage has compulsory buildings & contents insurance.