What’s happening to fixed rate mortgages? How much do you have to pay to get the best rates? There are some competitive deals out there, but watch out for fees – and the interest rate you’ll be on when the fixed rate deals ends.
Fixed rate mortgages – best buys
You’ll get the best deal if you have a deposit or equity of 30% or more and the cheapest rates are often accompanied by hefty fees and charges. Here are some of the best deals on the market at the moment. Bear in mind that mortgage deals can be withdrawn at short notice (see the Savvy Tip below) and lenders bring out new deals regularly. So check with a mortgage broker or price comparison site for the latest deals.
Two year fixed rate deals: up to 65% loan to value
Where relevant, I’ve assumed this would be a remortgage for a £250,000 property. Where valuation fees are included, these are normally tiered so the more expensive the property the higher the valuation fee.
HSBC: 0.99% fixed until 31.08.18. The maximum loan-to-value level for this mortgage is 65%. There is a product fee of £1,499, with arrangement and valuation fees bringing it to £1,696. Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 3.94%.
Yorkshire building society: 1.25% fixed until 31.07.18. The maximum loan-to-value level for this mortgage is 65%. There is a product fee of £1,345, with arrangement and valuation fees bringing it to £1,710. Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 4.99%.
Chelsea building society: 1.26% fixed until 31.07.18. The maximum loan-to-value level for this mortgage is 65%. There is a product fee of £1,145, with arrangement and valuation fees bringing it to £1,510.
SAVVY TIP: Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 4.99%.
Two year fixed rate deals: up to 80% loan to value
HSBC: 1.48% fixed until 31.08.18. The maximum loan-to-value level for this mortgage is 80%. There is a product fee of £1,499, with arrangement and valuation fees bringing it to £1,696. Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 3.94%.
Co-operative bank: 1.49% fixed until 31.08.18. The maximum loan-to-value level for this mortgage is 80%. There is a product fee of £1,349, with arrangement and valuation fees bringing it to £1,499. Once the mortgage deal runs out, you’d pay a standard variable interest rate of – currently – 4.74%.
First Direct: 1.57% fixed for two years. The maximum loan-to-value level for this mortgage is 80%. There is a product fee of £1,450, with arrangement and valuation fees bringing it to £1,682. Once the mortgage deal runs out, you’d pay a standard variable interest rate of – currently – 3.69%.
Two year fixed rate deals: up to 95% loan to value
Hanley Economic building society: 3.65% fixed for two years. The maximum loan-to-value level for this mortgage is 95%. There is a product fee of £250. Hanley Economic building society says on its website it doesn’t credit score. This means that a real human makes the decision about whether or not to lend to you, rather than an automated scoring process. It’s useful to know if you’re self employed, for example.
SAVVY TIP: Watch out; once the mortgage deal runs out, you’d pay an interest rate of – currently – 5.19%.
Tesco bank: 3.74% fixed for two years. The maximum loan-to-value level for this mortgage is 95%. There are no fees. Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 4.24%.
Hinckley & Rugby building society: 3.85% fixed for two years. The maximum loan-to-value level for this mortgage is 95%. There is a fee of £199.
SAVVY TIP: Watch out! Once the mortgage deal runs out, you’d pay a very high standard variable rate of – currently – 5.64%.
Five year fixed rate deals: up to 65% loan to value
West Bromwich building society: 2.09% fixed until 30.11.21. The maximum loan-to-value level for this mortgage is 65%. There are no fees. Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 3.99%.
Norwich and Peterborough building society: 2.11% fixed for five years. The maximum loan-to-value level for this mortgage is 65%. There is a product fee of £1,295, with arrangement and valuation fees bringing it to £1,735. Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 4.99%.
Leeds building society: 2.39% fixed until 30.09.21. The maximum loan-to-value level for this mortgage is 65%. There is a product fee of £999, with arrangement and valuation fees bringing it to £1,359.
SAVVY TIP: Watch out! Once the mortgage deal runs out, you’d pay a high variable interest rate of – currently – 5.69%.
Five year fixed rate deals: up to 80% loan to value
HSBC: 2.39% fixed until 31.08.21. The maximum loan-to-value level for this mortgage is 80%. There is a product fee of £1,499, with arrangement and valuation fees bringing it to £1,696. Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 3.94%.
Leeds building society: 2.15% fixed until 30.09.21. The maximum loan-to-value level for this mortgage is 80%. There is a product fee of £999, with arrangement and valuation fees bringing it to £1,359.
SAVVY TIP: Watch out! Once the mortgage deal runs out, you’d pay a high variable interest rate of – currently – 5.69%.
Platform: 2.39% fixed until 31.10.21. The maximum loan-to-value level for this mortgage is 80%. There is a product fee of £999, with arrangement and valuation fees bringing it to £1,210. Once the mortgage deal runs out, you’d pay a standard variable interest rate of – currently – 4.74%.
SAVVY TIP: Platform may not be a familiar name. It’s part of Co-operative bank but you can only get its mortgages if you go through a mortgage broker.
Five year fixed rate deals: up to 95% loan to value
Tesco bank: 4.29% fixed until 30.09.21. The maximum loan-to-value level for this mortgage is 95%. There are no fees. Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 4.24%.
Hinckley & Rugby building society: 4.29% fixed for five years. The maximum loan-to-value level for this mortgage is 95%. There is a fee of £999.
SAVVY TIP: Watch out! Once the mortgage deal runs out, you’d pay a very high standard variable rate of – currently – 5.64%.
Newcastle building society: 4.75% fixed until 31.08.21. The maximum loan-to-value level for this mortgage is 95%. There are no fees.
SAVVY TIP: Watch out! Once the mortgage deal runs out, you’d pay a variable interest rate of – currently – 5.99%, which is a very high standard variable rate.
Should you remortgage now?
Predicting interest rate or mortgage rate rises is notoriously tricky but fixed rate deals have been at incredibly low levels for some time (especially if you’ve got a big deposit). On the other hand, if you live in an area with high price rises and you have a repayment mortgage, it’s possible that in a few months’ time you may be in a lower loan to value band, which means that you might qualify for a cheaper mortgage rate.
Mortgage lenders currently charge more for borrowers who want to borrow a higher loan to value. So, if you want a mortgage that’s 90% of the property’s value, you’ll pay more (possibly quite a lot more) than if you want a mortgage that’s 65% of its value or 75%.
However, if you’re currently paying the standard variable rate on your mortgage, you could lose more by waiting to remortgage, because you’ll be paying a higher interest rate on your mortgage in the meantime.
SAVVY TIP: Mortgage lenders use interest rates to manage demand for their products. They can’t change the criteria they use to select mortgage applicants (because the regulator, the FCA, has laid down tougher rules that lenders must follow). So the only way they can generate more (or less) demand is by changing their mortgage rates and/or fees.
What to think about if you want to take out a fixed rate mortgage
If you want to take out a fixed rate mortgage, follow these tips:
Don’t just focus on the headline interest rate. Look at how much you’ll have to pay in fees and charges as well.
Don’t assume that all mortgage lenders charge the same or take the same approach. They definitely don’t! Some mortgage lenders are less keen than others to lend to people who are self employed, for example. Others are more flexible in their approach to older borrowers.
Get hold of a copy of your credit report a few months before you apply. Lenders are looking at credit reports much more closely than they did a few years ago.
Talk to an independent mortgage broker. You will normally (but not always) have to pay for their advice, but they will be able to tell you which bank or building society is more likely to lend to you and which deal is the cheapest for you.
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