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Teacher&#39s add up discount

Teacher&#39s Building Society has introduced a five-year discounted rate mortgage that is available for loans of up to 95 per cent of valuation.

The movemaker mortgage plan has a 0.75 discount for the first five years, giving a current payable rate of 5.99 per cent. There is no arrangement fee and borrowers who redeem during the discount period must pay 4 per cent of the sum repaid as a penalty.

According to Moneyfacts on August 7, 2001, Principality Building Society has a more competitive mortgage which is also available for loans of up to 95 per cent of valuation. It has a 0.86 per cent discount, giving a current payable rate of 5.59 per cent until August 31, 2006.

Like the Teacher&#39s Building Society mortgage, there is no arrangement fee and borrowers also get the added incentive of a £250 cashback. If they redeem the mortgage during the discount rate period, the cashback is reclaimed as a penalty, which is lower than the penalty imposed by Teacher&#39s Building Society.

Principality is also more competitive than Teacher&#39s Building Society in terms of the mortgage indemnity guarantee (MIG) that is charged on higher loans. Teacher&#39s Building Society charges a MIG at 7 per cent on loans above 85 per cent of

valuation, while Principality charges MIG at 6.15 per cent on loans above 90 per cent of valuation.

This means that borrowers with a 95 per cent mortgage on a property worth £100,000 will pay a MIG of £1,230 with Principality and £1,400 with Teacher&#39s Building Society.

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