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Standard leads way with 25-year cap

Standard Life Bank&#39s new25-year capped-rate mort-gage could set a trend

for the industry.

Standard claims the launch of Futureperfect is the first time in the UK

that a banking arm of a life office has used the annuity book of the parent

company to fund a product.

Normally products are financed by account deposits.

Savills Private Finance industry analyst Mark Chil-ton says competitors

withsimilar business set-ups,such as Prudential and Legal & General, are

very likelyto follow Standard LifeBank&#39s lead.

The product, which is capped at 6.25 per cent, is expected to be a big

seller among borrowers who are shopping for a secure loan over five years.

Mortgage brokers are saying they will market the loan as a five-year

capped rate with the option to continue.

There are no redemption penalties on the mortgage after five years.

The mortgage has a maximum loan to value of 90 per cent up to £350,000.

Interest is calculated on a daily basis and the company will make a

contribution towards borrowers&#39 legal fees. Applications can be made over

the phone.

London & Country Mortgages senior manager Patrick Bunton says: “Most

borrowers will be reluctant to lock themselves into a25-year deal but as a

five-year loan it is an easy sell.”

Standard Life Bank finance director John Gill says: “What this product is

about is long-term security and long-term control over their outgoings. If

people decide to remortgage after five years, they will be missing out on a

very valuable guarantee.”

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