Income on escalators

INVESTMENT companies and building societies are enticing savers with products that pay an escalating income over several years.

Save & Prosper has launched a five-year High Income Bond, initially offering 8 per cent and rising to 10 per cent, while Cheshire Building Society's five-year Escalator Bond, with a top rate of 9.6 per cent gross, starts at 5.85 per cent, paid monthly.

Halifax Building Society is increasing interest rates on its Stepped Income Reserve account to 5.5 per cent in year one, rising to 9.5 per cent by year five, from 5.25 and 9 per cent.

General Portfolio's six-year Millennium High Income Bond pays 10.3 per cent annual income until the year 2000. Return of capital depends on the FT-SE 100 rising by 33 per cent over that period.

----------------------------------------------------------------- SIX OF THE BEST ----------------------------------------------------------------- Savings ----------------------------------------------------------------- Type Account Term 0% 25% 40% Min pounds GIB London & Manchester 5 years 6.75 6.75 5.73 2,000 B Soc Northern Rock Instant 6.75 5.06 4.05 25,000 Tessa Hinkley & Rugby 5 years 7.35 7.36 7.36 3,000 ----------------------------------------------------------------- Compounded annual rate except for GIB (guaranteed income bond) ----------------------------------------------------------------- Source: Chase De Vere 071-404 5766 ----------------------------------------------------------------- Mortgages ----------------------------------------------------------------- Type Source Deal Variable Northern Rock* 2.99% discounted rate on 90% loans Fixed Bristol & West CMS 7.4 % 4yrs on 70 % loans Capped Royal Bank of Scotland 8.49% 5yrs on 95% loans *Arrangement fee of pounds 150. Household insurance through Northern Rock. ----------------------------------------------------------------- Source: John Charcol 071-611 7000 -----------------------------------------------------------------