Skipton Building Society has brought in the base rate tracker mortgage.
The mortgage will have an interest rate of 0.85 per cent above the Bank of England base rate for the first four years of the mortgage for loans of up to 95 per cent of valuation, giving it an initial rate of 6.1 per cent.
The mortgage will have a redemption penalty of the amount of interest payable at the end of the month that the mortgage is paid off. There are no legal fees for remortgages.
Insurance is compulsory, but borrowers will be able to choose from one of three insurance options provided by Skipton. They can either take house and contents insurance, or the Skipton Homeplan, which is a budget version of house and contents insurance, or they can choose accident sickness and unemployment insurance.
The number of companies that offer mortgages with compulsory insurance has been decreasing and now numbers less than a dozen. This follows widespread criticism about these types of products. In some cases it might be cheaper for the borrower if they take out a mortgage and then purchase any insurance separately.
According to Moneyfacts the most competitive four-year base rate tracker mortgage is from Cheltenham & Gloucester Building Society. This has an interest rate set at 0.75 per cent above the Bank of England base rate for loans of up to 90 per cent of valuation, giving it a payable rate of 6 per cent. This also has a redemption penalty of the remaining interest payable to the end of the month that the mortgage is repaid, along with no legal fees for remortgages, but unlike the Skipton mortgage it does not have compulsory insurance.