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TMO steps up its discount rate mortgage

The Mortgage Operation has introduced the exclusive triple discount mortgage.

Aimed at both first time buyers and existing homeowners, the mortgage has a stepped discount of three per cent for the first three months of the mortgage, followed by a 1.25 per cent discount for the next 21 months, and then a one per cent discount for another year. The maximum loan to value is 85 per cent of valuation.

Based on the current interest rate this gives the mortgage a payable rate of 4.48 per cent for the first three months, 6.23 per cent for the next 21 months and then 6.48 per cent for the next year. Redemption penalties are five per cent of the advance for the first three years.

The Mortgage Operation product is not the most competitive three-year stepped rate discount mortgage on the market. According to Moneyfacts on April 20, 2001, this is the 4.2 per cent mortgage from Beverley Building Society. It has a three per cent discount for the first year of the mortgage, making a payable rate of 4.2 per cent. It then has a one per cent discount for the second year followed by a 0.5 per cent discount for the third year. The maximum loan to value is 95 per cent of valuation and the early redemption penalty is four per cent of the advance for the first three years.

The Beverley Building Society mortgage has no mortgage indemnity premium (MIP) while for remortgages is refunds the valuation fee and any legal fees. The Mortgage Operation product has a MIP of 6.95 per cent, and does not refund any fees for remortgages.

Based on a £100,000 mortgage, London & Country Mortgages says that monthly payments for the Mortgage Operation 4.48 per cent mortgage would be £568.97 a month. The Beverley Building Society 4.2 per cent mortgage, on the other hand, would require payments of £544.77 a month.

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