Demand for fixed rate mortgage deals has risen over recent months.  Borrowers are increasingly concerned about the prospect of rising interest rates and have turned to fixed rates in order to protect themselves against substantial increases to the Bank of England Base rate.

One of the major problems with fixed rates, however, is that they generally carry high ‘early repayment charges’.  This means that you can often pay a significant penalty if you want to come out of your fixed rate early.

Now, though, a leading lender has launched a fixed rate with no early repayment charges.

Fixed rate deals with no early repayment charge

The Daily Telegraph reports that the Coventry Building Society ‘is offering a range of fixed-rate mortgages that do not have any early repayment charge’.

Britain’s third largest building society now offers a five year fixed rate at 4.99 per cent with a £999 arrangement fee.  The deal is available to 85 per cent loan to value.

At up to 65 per cent loan to value, the same deal is available at 4.05 per cent.

Offering a fixed rate deal with no early repayment charges is very rare.  For example, Santander currently offer a five year fixed rate mortgage deal at 4.99 per cent but if you want to pay back the loan early you’ll pay a penalty of 5 per cent.

Ray Boulger from mortgage brokers John Charcol believes that more than 1 in 20 people with a five year fixed rate deal end up paying early repayment charges.

Mr Boulger said: “It’s very unusual to have a fixed rate mortgage with no early redemption charge because it amounts to a one-way bet for the borrower.

“If standard variable rates go up, you continue to pay the same for your mortgage. If variable rates go down, you can remortgage.”