by Mark Johnston
Leeds Building Society New Mortgage Deal!
At the moment banks and building societies are benefiting from record low interest rates, and cheap Government funding which was designed to stimulate the housing market.
The mortgage market is currently in the middle of a price war which seems to have stepped up a pace.
So it seems that Leeds Building Society has become the first lender to offer a 0 per cent mortgage deal.
The building Society has launched new fixed rate mortgage deals which offer home owners the option of paying no interest at all for the first six months.
Although this will reduce mortgage payments initially they will then pay a slightly higher rate for the remainder of the term. The exact rate will depend on how long you take the interest free deal for, and the size of a borrowers deposit.
These new deals are called the welcome mortgage, which also comes with no completion fee, a free standard valuation is available up to £335.
Borrowers can also choose from a loan to value (LTV) rate of 80 per cent, 85 per cent or 90 per cent.
The welcome mortgages have just a small arrangement fee of £199 and Borrowers can repay up to 10 per cent of their capital each year without penalty.
The three year fixed rate version of the welcome mortgage starts from 3.79 per cent, with three months at 0 per cent, and the five year fixed rate at 4.23 per cent.
For instance then a borrower with a £150,000 mortgage at 80 per cent LTV using the welcome mortgage would pay £500 for the first three months, repaying the solely the capital rather than the interest. Once the 0 per cent period is over it would then revert to a normal capital and interest repayment of £770.
These mortgages are open to anyone apart from those wanting to remortgage or those on an interest only deal.
These particular mortgages are likely to appeal to those moving home, who often have additional expenses to meet in the first few months. These deals also give home buyers a little breathing space and this will particularly appeal to many first time buyers.
Kim Rebecchi , Leeds building society sales and marketing director says “the product has been designed to help borrowers reduce their outgoings immediately after they move in”.
Some experts feel it is good to see a bit of innovation in the mortgage market and they add that interest free deals have become common place in the credit card market for years.
Andrew Hagger, a mortgage analyst said “this offers some flexibility to borrowers without any hidden catches or additional costs. Borrowers aren’t paying any more for taking this interest free option, when compared to the standard pricing on Leeds’ mortgage range”.
London & Country Mortgages David Hollingworth, adds “ I think a lot of people will use it as a way to try and keep on the paying the same amount to try and reduce the mortgage more quickly.”
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