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Skipton creates unique mortgage

Skipton Building Society is offering the only five-year capped-rate mortgage with an initial discount on the market.

Capped at 6.5 per cent until January 31, 2007 the mortgage also has a discount of 0.75 per cent for the first two years of the loan, which gives it an initial payable rate of 5.9 per cent.

Skipton has also thrown in free legal fees for remortgages in Wales and England. The maximum loan is 85 per cent of the value of the house.

Borrowers can choose one of three free insurance options, picking either accident, sickness and unemployment cover, house and contents insurance or the Skipton homeplan, which is a budget form of building and contents insurance.

The mortgage is portable for the term of the capped-rate period and has an arrangement fee of £295. The redemption penalty is 5 per cent for the first year and then descends by 1 per cent a year until year five.

According to Moneyfacts on August 28th 2001 the nearest mortgage with a similar set-up is from Nationwide. This has a cap of 9.99 per cent for the first three years, with a discount of 1.34 per cent for the first two years giving it a payable rate of 4.59 per cent. It offers a loan to valuation of 95 per cent, has a £295 arrangement fee and has redemption penalties of 3 per cent in the first year, 2 per cent in the second year and 1 per cent in the third year.

Comparing how much the mortgages will cost, according to the Independent Mortgage & Investment Service monthly repayments for the Skipton product will cost £491.66 and the Nationwide mortgage will cost £382.50 a month.


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