Scarborough Building Society has introduced the flexible lifetime discount mortgage.
This mortgage is available for loans up to 95 per cent of valuation and a maximum of £250,000. It has a 1.4 per cent discount for the life of the loan which gives a current payable rate of 5.59 per cent. There is no arrangement fee and no early redemption fee.
In terms of flexibility, the Scarborough mortgage supports overpayments, underpayments, payment holidays and interest is calculated on a daily basis, but borrowers cannot make lump sum withdrawals.
According to Moneyfacts on July 16, 2001, the Scarborough mortgage has the most competitive rate compared to similar mortgages, although there are no direct comparisons. Shepshed Building Society offers a 0.5 per cent discount on mortgages up to 95 per cent of valuation for the mortgage term, which gives a current payable rate of 6.49 per cent.
Although this mortgage does not have any flexible features and has a higher interest rate, its advantage over the Scarborough one is that it allows a higher maximum advance of £300,000.
Borrowers who want a flexible mortgage could go for the Woolwich open plan offset mortgage which has a current payable rate of 6 per cent. Again, this is higher than the Scarbrough Building Society mortgage, and it is more flexible as it has a current account facility and does not limit advances to a monetary amount.