The repayment mortgage fixes payment levels a bit above the amount required to service the mortgage in the normal way.
On a pounds 65,000, 25-year loan at 7.99 per cent, the normal monthly payment is pounds 506. Under The Accelerator Mortgage, the payment would be rounded up to the nearest pounds 50 - pounds 550 - with half paid on the 14th and half on the 28th of the month.
This would repay the mortgage after 20 years and two months. If the borrower paid pounds 600 a month, it would be repaid after 16 years and seven months.
The scheme has been set up with the Leeds & Holbeck, a top 20 building society, but may be offered with other lenders in future.
Overpayments are not credited immediately. So just as with borrowers who overpay in a less organised way, extra payments are not immediately reducing the debt.
The overpayment is credited each 1 February and borrowers are given the option of changing their top-up payment. The basic payment will change automatically for those with a variable- rate loan any time there is a change in interest rates. There is also a fixed rate of 7.99 per cent until January 1997 - the same as the current variable rate.
Borrowers can make lump sum payments. There is an arrangement fee of pounds 295 plus a reservation fee of pounds 35, but there is no compulsory buildings or contents insurance.Reuse content