The Woolwich has introduced the open plan three-year capped rate mortgage.
The mortgage has been targeted at first time buyers and not at anyone who is looking to remortgage. The interest rate is capped at a ceiling of 5.99 per cent for loans of up to 95 per cent of valuation until April 1, 2004.
After the capped rate period the mortgage will revert to the companies standard variable rate of 7.75 per cent. The mortgage comes with redemption penalties during the capped rate period of six month's interest at the capped rate or the standard variable rate, whichever is the higher. These penalties do not extend beyond the capped rate period.
Looking at how competitive the mortgage is, according to Moneyfacts it is the fifth most competitive available on January 8, 2001. The cheapest capped rate three year mortgage is the 5.74 per cent cap from Bradford and Bingley, which has a capped rate of 5.74 per cent for loans of up to 85 per cent of valuation. It too has no extended redemption penalties.