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TMO leaves tracks

The Mortgage Operation has unveiled the freedom mortgage, a flexible base rate tracker that discounts the Bank of England base rate by 0.45 per cent in the first nine months.

This gives a current payable rate of 4.55 per cent and after the discount period, it will track at 1.2 per cent above the base rate for the mortgage term. It is available for loans of up to 90 per cent of valuation and there is no early redemption penalty.

Borrowers can make overpayments, underpayments, and lump sum withdrawals. They can also take payment holidays and interest is calculated on a daily basis.

The base rate has fallen from 6 per cent to 5 per cent this year, which illustrates the positive side of tracker mortgages, but the down side is that the base rate could rise just as quickly future months.

According to Moneyfacts on August 3, 2001, there are no exact comparison to this mortgage. However, Bristol & West is a similar flexible base rate tracker for loans up to 90 per cent of valuation which is initially more competitive. Easyflex total offers a 1.75 per cent discount from its standard variable rate for the first six months, giving a current payable rate of 4.45 per cent.

After this period, it tracks at 1.20 per cent above the base rate for the mortgage term. There is no early redemption penalty and it has the same flexibility as The Mortgage Operation.

Borrowers with The Mortgage Operation pay a higher rate for the first six months but will benefit from a longer discount period than Bristol & West. However, some borrowers may compromise on flexibility to get a longer discount period.

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