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Private Label introduces convertible mortgage

Private Label has introduced the tracker fix mortgage with a difference.

The mortgage has a fixed rate of 5.79 per cent for the first five years of the mortgage for loans of up to 95 per cent of valuation, with a maximum loan amount of £150,000.

However during the five-year fixed rate period if the borrower wants to convert to a tracker rate, then the customer can do so free of charge after 30 days written notice. If the customer makes the switch then the mortgage has an interest rate of 1 per cent above the Bank of England base rate for the life of the loan.

The mortgage has redemption penalties of 5 per cent of the advance in year one, 4 per cent in year two, 3 per cent in year three, 2 per cent in year two and 1 per cent in year five. There is also an arrangement fee of £299.

The Private Label mortgage is an innovative product and is the first of its kind on the market. It should appeal to borrowers who are looking for the reassurance of paying a fixed rate for a mortgage, especially if interest rates start to rise, but who also want an escape option if interest rates continue to drop.

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