The rate is Base Rate - 0.90% until 31 October, giving a current pay rate 3.10% (5.3% APR), followed by Base Rate + 0.40% to 31 October 2005.
Redemption penalties reduce each year and apply until 31 August 2005, but borrowers are able to repay up to 10% of the loan, penalty free, each year. Remortgagers benefit further with a free valuation and free legal fees.
Commenting on the deal, Ray Boulger, senior technical manager at Charcol, said: "This mortgage has an extremely low initial pay rate of just 3.10%, and its average rate until 31/10/05 is less than Base Rate (currently 4%), making it the market leading 3 year tracker on both counts. Furthermore Base Rate will have to increase considerably to make this deal uncompetitive compared with the cheapest 3 year fixed rates."
Boulger continued: “Although redemption penalties apply until 31/10/05 the option to repay up to 10% p.a. penalty free will be of benefit to many borrowers. Any overpayments are guaranteed to be available to take payment holidays or make underpayments later if required, thus allowing borrowers to overpay now while rates are low to build up a reserve for future underpayments in case rates rise further than expected."
This mortgage is available up to a maximum of 75% of property value and has a minimum loan size of £150,000. A similar alternative is available for borrowers requiring a smaller loan.
