Lloyds TSB has entered into a three year agreement with Northern Rock, whereby borrowers coming to the end of fixed rate periods on Northern Rock mortgages will be offered the opportunity to switch to a Lloyds product.

As the borrower approaches the end of their deal – and on the basis they meet certain criteria - Northern Rock will write to them, giving them the opportunity to apply for a Lloyds deal.

Those borrowers that do switch to a Lloyds product will benefit from free legals and valuation work, and a waiver of the application fee.

The new process will commence from July. Northern Rock claims the deal will require 100 existing staff who might otherwise have been at risk of redundancy.

Ron Sandler, executive chairman of Northern Rock, said: “We have already reported solid progress against our business plan, including meeting our planned target for mortgage redemptions, as we continue to repay the Bank of England facility. This new agreement with Lloyds TSB improves our ability to manage our mortgage redemptions and I am delighted that it has been concluded.”

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