Mortgage Express reveal 4.09% fixed rate deal for five years (existing borrowers only)Make Text Bigger
The bank closed it’s doors to new lending a few years ago as a result of the credit crunch and has a strategy to clear all existing lending within eight years.
They are encouraging redemptions (waiving penalties) and selling off loans to achieve their goal so they are definitely serious.
Their latest offering is a five year fixed rate at 4.09% to existing borrowers only. The deal is a bit sketchy and we don’t know yet whether the ERC’s will apply to these fixed rate deals or what the reversion rate will be at the end of year five.
Whilst the rate will appear attractive to many borrowers there is a catch. The new mortgage term is only seven years! They want rid of their borrowers within their deadlines and are highly unlikely to extend the term. Therefore, if you have a 25 year term now, and you decide to switch to the fixed rate, you will be forced to refinance or sell your property within seven years or risk repossession.
The bank has predicted that 80% of its lending will be at risk if bank base rates increase to 5% .
Before switching you should consider the potential implications and seek independent advice.
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