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Staffordshire goes for discount with teeth

Staffordshire Building Society has introduced the 2.26 per cent discount mortgage.

The mortgage is aimed at all clients and has a discount of 2.26 per cent from the society’s standard variable rate of 7.25 per cent. This gives it a payable rate of 4.99 per cent for the first two years of the mortgage for loans of 95 per cent of valuation for first time homebuyers, or 90 per cent for people looking to remortgage.

The product has redemption penalties of five per cent of the advance for the first three years of the mortgage loan. There is also a loyalty bonus. Customers who stay with the Staffordshire Building Society for more than five years will get a 0.4 per cent reduction on their base rate.

Staffordshire’s mortgage is not the most competitive two year discounted mortgage on the market. According to Moneyfacts on March 6, 2001 the most competitive two year discounted mortgage is the 3.55 per cent discount from The Woolwich, which has a discount of 3.55 per cent, giving it a payable rate of 3.95 per cent for loans of up to 95 per cent of valuation for first time homebuyers or 90 per cent for people looking to remortgage.

Redemption penalties for The Woolwich mortgage are six months’ interest for the first five years of the loan.

Based on a £100,000 mortgage with a loan to value of 95 per cent, London & Country Mortgages says that monthly payments for the Staffordshire 4.99 per cent mortgage would be £590.68 a month. The Woolwich 3.95 per cent mortgage monthly payments would be £525.08.

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