Scarborough Building Society has introduced the flexible base rate tracker plus moneyback mortgage, which gives borrowers a £275 cashback.
The interest rate is 1.10 per cent above the base rate and is guaranteed not to exceed this during the mortgage term. Following the Bank of England's 0.25 per cent cut in the base rate to 5.75 per cent, the interest rate payable is currently 6.85 per cent.
It is available on loans up to 95 per cent of valuation and does not have an early redemption penalty but it does not have an extensive range of flexible features. Overpayments and underpayments are allowed, but payment holidays are not available and there is no lump sum withdrawal facility. Interest is calculated on a monthly basis, which does not benefit borrowers as much as the daily calculation of interest.
According to Moneyfacts on February 21, 2001, Barclays Bank is also offering a flexible mortgage at 1.10 per cent above the base rate for the mortgage term. Like the Scarborough mortgage it is available on loans up to 95 per cent of valuation but its flexibility is better since it allows payment holidays to be taken and interest is calculated daily. However, some borrowers may prefer the Scarborough Building Society's offer of a cashback.