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Scarborough introduces flexible tracker

Scarborough Building Society has designed a flexible mortgage that has an interest rate of 6.99 per cent.

The flexible lifetime discount mortgage enables borrowers to make underpayments, overpayments, take payment holidays and interest is calculated on a monthly rather than a daily basis.

The mortgage interest rate is guaranteed not to exceed the Bank of England base rate by more than one per cent during the life of the loan.

It is reasonable in terms of flexibility, but it lacks a lump sum withdrawal facility. It is possible to get a lower interest rate, but the maximum loan may also be lower on a loan to valuation of 95 per cent and might therefore be unsuitable for first time buyers who have smaller deposits.

According to Moneyfacts, Yorkshire Building Society is offering a similar flexible mortgage with an interest rate of 6.74 per cent. Like the Scarborough product, it is guaranteed not to exceed the Bank of England base rate by more than one per cent for the life of the mortgage and borrowers can make underpayments and overpayments, take payment holidays.

It has the edge over the Scarborough mortgage in that interest is calculated daily. However, it has a maximum of 95 per cent of valuation up to a maximum of £150,000, which is considerably lower than the Scarborough product. But like the Scarborough product, it does not allow lump sum withdrawals.

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