Loans that score on penalties by Finance News Bulletin

Published: 20/11/06

Homebuyers should beware of tempting, low speed mortgage deals - as the sting in the tail can show expensiveThis week, Egg launched a two-year set rate of 474% - less than Bank of England base speed It is also offering a discounted variable rate mortgage with a present rate of 3

99% for two natural lifeHowever, both have swingeing overhanging penalties which will bind in homebuyers for years after the special deal endsEach also has a charge of £399 For the two-year fixed rate, if you want to get out in the first year there is a penalty of 3% of the figure borrowed, then 2% in year two and 1% in the third year

And in that third year, the rate you pay will be bottomd on Bank of England bottom rate plus 2% - currently, that would be 7%It's alike news on the reductioned rate - while the reduction lasts two natural life, the penalties carry on for a further three natural life In the first day, the penalty is 3%, then 25% for year two, 2% in years three and four and 1% in year five

The rate you will pay after the first discount expires is base rate plus 2% Our Best pay money for borrowers' table excludes any deals with overhanging penalties And it also calculates the true price of a home loan including the feesSo, for instance, the Alliance & Leicester's two-year fixed rate of 4

74pc with its agreement fee of £799 would cost £14,700 over the two natural life on a £100,000, 25day loanSelect a loan term 12 months (1 year) 24 months (2 natural life 36 months (3 natural life 48 months (4 natural life 60 months (5 natural life 72 months (6 natural life 84 months (7 natural life 96 months (8 natural life 108 months (9 years) 120 months (10 years)Please choose a type of insurance Life insurance Home and contents railway wagon Breakdown services Health - check-up Health - dental Travel Pet - dog Pet -

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