The mortgage is being targeted at borrowers who have a seasonal income or those earning high commission or bonuses. The initial rate of 3.99 per cent is based on the Bank Base Rate (BBR) minus 0.01 per cent for the first year followed by BBR plus 1 per cent in year two.
Richard Stokes, product development manager of TMO, said: "This is becoming more important as overpayment products are definitely on the increase – TMO has seen a 50 per cent rise in the sale of redemption-free products in the last year.
"A customer who chisels away at their mortgage by paying a little extra each month, particularly while rates are so low, would be better off with daily interest. Customers with varying income streams, who are more likely to make lump-sum overpayments, would see a huge difference between daily and annual interest."
