How to Find a Cheap Mortgage
The housing market is currently brilliant for borrowers; what with the low interest rate and the return of competition between lenders it’s definitely a case of ’seek and ye shall find’ a brilliant mortgage deal. It’s also a case of ‘get in there quick’ because these current market conditions can’t last indefinitely.
The first two months of 2010 have seen fixed rates chopped and tracker deals whittled down in cost and the best bit is that this is not only for those low-risk borrowers who, let’s face it, have never really had too many problems getting a mortgage. If you are classified as ‘high-risk’ or have only a minimal deposit, it’s your time too.
In fact, since November of last year mortgage rates for borrowers with a 10% deposit have fallen from 7% to 5.3% – that’s a third. To put this into real terms, if you take out a 90% loan to value deal now it will be £160 per month cheaper than if you had taken it out in November.
Despite the more favourable market, when it comes to deposits it’s still a case of the bigger the better; even with the best deal on a 90% mortgage, you will still pay more than twice the interest rate of a 60% mortgage. A 60% loan to value deal will attract an interest rate of approximately 2.58% compared to that 5.3% mentioned above.
New mortgage deals
Yorkshire Building Society: new range of mortgages at up to 85% loan to value
HSBC: new range of mortgages including a super-low five-year fixed rate at just 4.64%. This deal is only available up to 60% loan to value and attracts a fee of £999, so you will need a lot of money up-front to qualify.
Norwich & Peterborough Building Society: a new range of three-year discounted variable rates available up to 75% loan to value. The fee for this one is £695 and rates start at 2.95%.
Northern Rock: two-year fixed rates now start at 3.59% and 2-year trackers from 2.65%. These mortgages are part of the NR’s new Everyday range, which are not as flexible as the existing, fully flexible, range.
The Post Office: range expanded to include 75% loan to value deals. Set up fee is £599.
Current Best Mortgage Buys
The following are based on the total cost over the first 2 years and assume a property price of £250,000 on a 25 year repayment mortgage.
10% deposit, getting a mortgage of £225,000 on a property costing £250,000
HSBC term tracker rate at 4.99% (Base+4.49) with no fee
Santander (Abbey) two-year tracker rate at 5.49% (Base+4.99) with a £995 fee
Santander (Abbey) five-year fixed rate at 6.69% with a £995 fee
15% deposit, getting a mortgage of £212,500 on a property costing £250,000
Leek United BS
two-year discounted rate at 2.95% with a £195 fee
HSBC term tracker rate at 4.99% (Base+4.49) with no fee
Leek United two-year fixed rate at 4.79% with a £195 fee
20% deposit, getting a mortgage of £200,000 on a property costing £250,000
Leek United BS two-year discounted rate at 2.95% with a £195 fee
Nottingham BS three-year tracker rate at 3.99% (Base+3.49) with a £795 fee
Leek United two-year fixed rate at 4.79% with a £195 fee
25% deposit, getting a mortgage of £187,500 on a property costing £250,000
ING Direct two-year tracker rate at 2.64% (Base+2.14) with a £795 fee
ING Direct term tracker rate at 2.89% (Base+2.39) with a £695 fee
First Direct 2-year fixed rate at 3.29% with a £998 fee
30% deposit, getting a mortgage of £175,000 on a property costing £250,000
Santander (Abbey) three-year tracker rate at 2.54% (Base+2.04) with a £995 fee
ING Direct term tracker rate at 2.89% (Base+2.39) with a £695 fee
First Direct two-year fixed rate at 3.29% with a £998 fee
40% deposit, getting a mortgage of £150,000 on a property costing £250,000
HSBC
two-year discounted rate at 2.39% with a £999 fee
First Direct term tracker rate at 2.89% (Base+2.39) with no fee
Yorkshire BS two-year fixed rate at 3.39% with a £495 fee
