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Tuesday, December 22, 1998 Published at 13:46 GMT


Cheaper than a mortgage

Mr Mandelson also escaped all the time-consuming paperwork

Peter Mandelson was more fortunate than than most home owners in being able to borrow from a friend to pay for his house.

Had he used the traditional mortgage route of a bank or building society, he would not have found them so generous.

Mr Mandelson would have had to be earning a great deal more than the backbench MP's salary of around £40,000 that he was taking home at the time he bought the property in 1996.

He would have needed an annual salary more in keeping with a high-flying company director to afford a loan of £373,000.

The Trade and Industry Secretary would have had to be earning around £115,000 to be able to borrow such a large amount from a bank or building society, where mortgages rarely exceed 3.25 times the applicant's annual salary.

His £40,000 salary would have allowed him to borrow a maximum of £130,000.

According to the Halifax, Mr Mandelson would have had to repay £2,818.34 every month for 25 years to pay off such an amount at the standard variable mortgage rate which is currently 7.7%.

By now, he would have paid more than £73,000 - most of which would have been interest on the loan.

On his backbench MP's salary, he would have been paid in the region of £2,500 a month after tax.

Savings galore

The low interest loan he received from Paymaster General Geoffrey Robinson has saved him at least £10,000 in interest payments after just two years.

Mr Mandelson said the loan, made in October 1996, had always been intended as a "short-term arrangement" and that he had paid back £40,624.68 so far.

He says he is in the process of paying off the outstanding £332,375.32 with the help of his mother.

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