If you've got a decent sized deposit or are looking to remortgage, here are some of the best products on the market.
Don't you just love reports released by lenders? Last week saw the Halifax state that house prices had fallen in March, while Nationwide BS merrily declared that they'd risen! Who was it who said never trust a mortgage provider?
But whatever the current story with property, there's no denying that interest rates are at an all-time low and likely to stay that way for a while, making many mortgage deals look very appealing.
So what should you do if you need to take out a mortgage or remortgage? What are the best deals around?
Fixed-rate deals
First up are the fixed-rate deals. Not only are they simple to understand and budget for (you make the same monthly payment for the duration of the loan regardless of interest rate fluctuations) but some are looking pretty good at the moment, too. Here are Moneyfacts' best buys:
Top fixed rate deals
|
Provider |
Rate |
Period |
Fee |
|
|
First Direct |
2.99% |
2 years |
75% |
Booking £599, arrangement £299 |
|
Mansfield BS |
3.39% |
2 years |
75% |
Arrangement £999 |
|
NatWest |
3.49% |
31/5/2011 |
75% |
£799 |
|
Yorkshire BS |
3.79% |
30/4/2011 |
75% |
Booking £195, arrangement £300 |
|
Loughborough BS |
4.39% |
2 years |
80% |
Completion £449 |
Source: Moneyfacts
As you can see, topping the table is First Direct, offering a 2-year-fix at just 2.99%.
However, it does have a hefty £898 fee attached, comprised of a booking fee of £599 (this holds the amount of money you require for up to 6 months) plus an arrangement fee of £299 on top of this. The Yorkshire and Loughborough building societies charge far less but their rates are much less competitive, so you need to do your sums carefully to work out which one would costs you less. Four of the products have a loan-to-value (LTV) of 75%, meaning you need at least 25% equity to qualify (Loughborough BS requires slightly less at 20%).
I had a chat to our very own lovemoney.com mortgage brokers to see what they could offer and found they have a 2-year fixed deal from Abbey at 3.39%. However, with a whopping £1,999 arrangement fee this would only be lucrative for those with very large mortgages!
For those with more modest requirements, Royal Bank of Scotland is offering a 2-year fixed rate at 3.65% with a £999 fee.
Variable rates
Obviously with interest rates at just 0.5% they don't have much further to fall and after that, you've guessed it: the only way is up. But if you think we've got a while before that happens, a variable rate deal may appeal. Here are Moneyfacts' top picks:
Top variable rate deals
|
Provider |
Rate |
LTV |
Fee |
Duration |
|
First Direct |
2.89% |
75% |
£799 |
Term |
|
HSBC |
3.39% |
60% |
Booking £799 |
Term |
|
Derbyshire BS |
3.49% |
80% |
Arrangement £999 |
Term |
|
Clydesdale Bank |
3.99% |
80% |
Arrangement £999 |
Term |
|
The One Account |
3.75% |
75% |
- |
Term |
Source: Moneyfacts
Again, topping the table is First Direct. This product is in fact an offset mortgage, meaning it allows you to use your savings to "offset" the loan and thus reduce the amount of interest accrued. It does have hefty costs, but the lender will pay up to £400 of legal fees. It also has one of the lowest LTVs at 75%.
Finally, let's have a look at discounted rate and tracker mortgage deals:
Discount and Tracker mortgages
|
Provider |
Rate |
LTV |
Fee |
Duration |
|
HSBC |
2.49% |
60% |
£249 |
2 years |
|
Cooperative Bank |
2.79% |
60% |
£995 |
Term |
|
3.24% |
60% |
£995 |
Term |
|
|
3.26% |
60% |
£995 |
3 years |
|
|
3.39% |
75% |
£995 |
3 years |
Topping the table this time is HSBC with its 2-year discounted rate mortgage at just 2.49%. Again, you need a hefty deposit to qualify but the fee is surprisingly reasonable. This product follows the HSBC variable rate (currently 3.94%) with a 1.45% discount.
Brokers are often privy to special deals so I again asked our lovemoney.com mortgage brokers for their best (tracker) deal - they are currently offering a Scottish Widows 2-year tracker at 3.19%, with a fee of £995.
So as you can see there are some good deals out there (particularly from HSBC and First Direct) but you do need a decent amount of equity/deposit to qualify. Those with 40% or more can choose pretty much take their pick, but if you're limited to 25% you'll probably find you have more choice from the fixed rate deals.
If you're keen to take out a new mortgage, here a couple of points to bear in mind:
Questions to ask a lender:
Is this product flexible? - if interest is calculated on a daily basis every pound you throw at your home loan can start working immediately to reduce it.
Can I make overpayments/take payment holidays? - most mortgages allow you to overpay by up to 10% per year and with even cash ISA rates currently so pitiful your mortgage could be a good home for your money - particularly if you have the option of taking the extra back should you need it.
So spend a bit of time working out which deal is best for you regarding rates and fees payable and hopefully you'll soon be paying less interest on that home loan. And if you don't have time? Give a no-fee, whole of market mortgage broker a call and get them to do the hard work for you!