Tesco Bank has launched the new lowest five-year fixed-rate mortgage on the market – at 1.68% with a £995 fee if you borrow 60% of your home's value when you remortgage.
It's the cheapest deal out there for those looking to remortgage their home, according to David Hollingworth, associate director at broker L&C Mortgages. But it's not available to buyers. So have to go through l&c
One of the benefits of the Tesco Bank remortgage is that it comes with free valuation and free basic legal work which could save those looking to remortgage around £200 to £300 on the valuation and around £300 for basic legal work.
Not bad i pay 2.79% for my 5 year but two years into it still! You get clubcard points for your statement! Mortgage £1000 a month you get 250 points
Top comments
casino_boss
7 Jun 173#6
Its a good idea to work out what you'll actually pay. It may be the best mortgage if you keep it for long term or borrow a certain amount.
First Direct have a Fee Saver mortgage at 1.94%. OK, its higher %, but if you're borrowing say £100k, over say 25 years, then it works out about £15 a month more expensive. Most people will only keep fixed for the fixed term, in this case 5 years. So over the course of the 5 years, First Direct will be £15 * 12 (month) * 5 (years) = £900. More expensive ? No, because Tesco charges £995 for this mortgage, so makes it £95 more expensive.
It all depends on how much you borrow etc, how long you will keep the mortgage, maybe over 5 years potentially, so not saying FD is better, but be aware, and add the fee into your calculations and also the amount you borrow. If you're after 200k, then the Tesco one will be cheaper (by about £800 over 5 years !)..... FD also offer free legal fees/survey etc, and if you pull out with a week to go....no charge. Tesco....£995 once its booked in. Also First Direct offer unlimited over payments, which is unusual.
Point is, its a good deal, if the sums add up for your personal circumstance, and how you see things panning out. Im voting hot
All comments (26)
davemhaynes
7 Jun 17#1
Is there any professional advice, not private opinion please, on how brexit/general election will affect house prices? Wondering if a five year deal is too long?
MyBoozyHell to davemhaynes
7 Jun 172#4
House pricing is sort of irrelevant.
It's more a question of the strength of the economy.
You need to look at your own personal circumstances to decide whether you want the security of knowing what you will be paying for 5 years, or if you're happy to accept the risk that things may go up (or down!) in that time.
For what it's worth, I don't believe house prices will plummet as the UK market is firmly weighted in the 'demand' side of the supply and demand argument.
Unless the next government suddenly decides to build millions of new homes overnight that is!
delusion to davemhaynes
7 Jun 17#9
Any professional advice that doesn't tell you this is the most uncertainty the property market has had in many years you should ignore.
Without a clear understanding of what terms brexit will have on the table at the end of negotiations its all guess work.
For example, imagine if 10% of eu citizens cut their stay short or move to mainland Europe. The amount of properties freed up would be massive in the short term reducing prices and rent return.
Longer term we are in a country with a growing population and less land to build more homes than the majority of other similar countries, so the home shortage is likely to continue and prices will rise again once balance and certainty is restored.
This is all guess work...
pcs7038 to davemhaynes
7 Jun 171#11
As someone else has said here, future house prices are largely irrelevant to this mortgage offer. There is no requirement to repay or refinance at the end of the term (you just stay on the lender's SVR).
If you're looking for expert opinion, search for reports from the major lenders - Nationwide and Halifax. But even that I would treat with caution. When interest rates fell to current levels in 2009, few people thought we would still see them this low 8 years later. Few experts predicted the Brexit result. Or the stock-market bounce resulting from fall in exchange rates.
Better advice might be to look at your own circumstances and the impact of big market changes: could you afford it if rates rise by, say, 2%. What if house prices fall by 25% (could be no effect if you have no plans to move for the foreseeable future). How secure is your job? And what would be your prospects if you did lose it?
crgritchie to davemhaynes
25 Jul 17#26
I know you asked for professional advice, but I'd say that it's not just property prices you'd want to consider over 5yrs, but also interest rates and the benefits of being certain of your outgoings from a budgeting perspective. Personally, I'd expect that there will be a downward pressure on property prices in the most volatile regions and sectors (e.g. London high value) but over 5yrs I'd expect prices to be up (maybe way up) on where they are today. If the pound stays weak the pressure is on to raise interest rates, both to counter inflation (though this would largely be due to high import prices) and also to attract international funds to attract hot money (which moves to where interest rates are more attractive).
nougat
7 Jun 17#2
House prices will plummet and rental prices will hit the roof. from an expert news watcher!
centaurandrew to nougat
7 Jun 171#5
If house prices plummet rental yields will increase therefore rental prices will fall - simple supply/demand.
Jerec
7 Jun 172#3
I doubt interest rates will rise that much in the next 5 years, but this is a low rate to lock into imo.
I'm 3 months away from coming out of a 5 year fixed that was 5%, the money I'm going to be saving soon is ridiculous!
Regprentice to Jerec
7 Jun 17#20
i remortgaged from 5.8% onto a 5 year fix at 3%, i kept my repayment the same amount and this reduced the remaining length of my mortgage by almost 50%.
casino_boss
7 Jun 173#6
Its a good idea to work out what you'll actually pay. It may be the best mortgage if you keep it for long term or borrow a certain amount.
First Direct have a Fee Saver mortgage at 1.94%. OK, its higher %, but if you're borrowing say £100k, over say 25 years, then it works out about £15 a month more expensive. Most people will only keep fixed for the fixed term, in this case 5 years. So over the course of the 5 years, First Direct will be £15 * 12 (month) * 5 (years) = £900. More expensive ? No, because Tesco charges £995 for this mortgage, so makes it £95 more expensive.
It all depends on how much you borrow etc, how long you will keep the mortgage, maybe over 5 years potentially, so not saying FD is better, but be aware, and add the fee into your calculations and also the amount you borrow. If you're after 200k, then the Tesco one will be cheaper (by about £800 over 5 years !)..... FD also offer free legal fees/survey etc, and if you pull out with a week to go....no charge. Tesco....£995 once its booked in. Also First Direct offer unlimited over payments, which is unusual.
Point is, its a good deal, if the sums add up for your personal circumstance, and how you see things panning out. Im voting hot
morgie
7 Jun 17#7
I realise you say sort of, but I'm thinking it's pretty relevant if you're borderline/your house valued at a level that means you meet 60% LTV.
gandalf72
7 Jun 17#8
agree with all what Casino boss is saying. Here is my take on things at the moment I dont think there is a mortgage better than 1.94% over a 5 year period for fixed rate mortgages for some people with no fees.
What I found was on the run up to brexit vote costs of products rose, sterling dropped in value. We have 2 major changes potentially about to happen i.e. general election and brexit. Markets will respond accordingly which may force the bank of england to raise / lower rates. I dont see them lowering rates as this is historically the lowest they have ever been. What I see happening is round about 3-4 years time rates rising. They cant go on this low forever and there has been a few on the bank of england who are in favour at present or in the past to rise rates but didnt get enough of their coleagues to get the rates higher.
The market leading 2.49% 10 year deal is only .55% different between the 5 and 10 with unlimited overpayments from First direct. I see as I said earlier that rises will happen and by more than 1% between year 3-5 and will continue to rise and that is why I am currently going through a 10 year fixed. I am gambling that this happens and if I am right I will recoup any loss I make by not taking out that 5 year easily in year 5 onwards. Again your situation may be different from mine but its worth considering if only to rule in or out.
Question you need to ask is do you think in 5 years that the mortgages you will have to pick from if you need a mortgage will be less than .55% of a difference?
rebelspawn to gandalf72
7 Jun 17#10
Good post, just just an additional point:
You also need to consider whether you are likely to want to move house in the next 2/5/10 years. Many mortgages are portable these days but if you plan to upsize (house and/or mortgage) as your next move, you could end up with a provider that won't lend the extra money to do so (i am told first direct have pretty strict criteria compared to others for example), thus having to pay the early exit fee, which in turn could eclipse any savings made from a long term fix.
MyBoozyHell
7 Jun 17#12
This is very true and I didn't take account of that specific situation....
Then my next paragraph about personal circumstance kicks in really.
If you have concerns that your house price will fall over the next 5 years significantly enough that you would move above 60% LTV, then surely you've answered your own concern that you should be trying to grab the best deal now to get that security back?
4447
7 Jun 17#13
Can someone please kindly give some advise?
My 2 year fixed at 2.29% is finishing at the end of this month and I've got under 60% ltv left so house worth over 140k and left 65k on mortgage.
My current provider is offering 2.69% for 2 years with no fee.
The rate your being offered does seem high, which would suggest they are covering their fee within the rate.
pcs7038 to 4447
7 Jun 17#17
The fee on the Tesco deal is just over 1.5% of your outstanding mortgage. Averaging over the five year period is about 0.3%. Add that to the rate, gives you just under 2% fixed rate for 5 years.
The HSBC deal has almost the same fee, and lower rate. Because it's only for 2 years, it averages out at 1.9%.
(These calculations are only approximations - an accurate calculation is much more complex - but they're good enough for this purpose)
I would go for the Tesco deal:
- it's a low overall rate. Who knows how and when interest rates will move, but the prevailing view is that they will start rising in a couple of years
- it's a long fix so you get certainty and also don't need to think about refinancing for a long time. .
budster4171 to 4447
7 Jun 17#21
Ask a mortgage advisor like me for a quote.. not tied to one lender either.
MrVee to 4447
10 Jun 17#24
im not a mortgage adviser but Ive always been with Nationwide. With your figures as a new customer they would offer you a 2 year fixed @ 1.59% with no fee. same rate for a 2 year tracker with no fee. A 5 year is 2.09% no fee. my advice would be to leave your current provider as they are not competetive! my other advice would be to take a tracker for 2 years that has no early repayment charge and get it hammered with overpayments!
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Opening post
Tesco Bank has launched the new lowest five-year fixed-rate mortgage on the market – at 1.68% with a £995 fee if you borrow 60% of your home's value when you remortgage.
It's the cheapest deal out there for those looking to remortgage their home, according to David Hollingworth, associate director at broker L&C Mortgages. But it's not available to buyers. So have to go through l&c
One of the benefits of the Tesco Bank remortgage is that it comes with free valuation and free basic legal work which could save those looking to remortgage around £200 to £300 on the valuation and around £300 for basic legal work.
Not bad i pay 2.79% for my 5 year but two years into it still! You get clubcard points for your statement! Mortgage £1000 a month you get 250 points
Top comments
First Direct have a Fee Saver mortgage at 1.94%. OK, its higher %, but if you're borrowing say £100k, over say 25 years, then it works out about £15 a month more expensive. Most people will only keep fixed for the fixed term, in this case 5 years. So over the course of the 5 years, First Direct will be £15 * 12 (month) * 5 (years) = £900. More expensive ? No, because Tesco charges £995 for this mortgage, so makes it £95 more expensive.
It all depends on how much you borrow etc, how long you will keep the mortgage, maybe over 5 years potentially, so not saying FD is better, but be aware, and add the fee into your calculations and also the amount you borrow. If you're after 200k, then the Tesco one will be cheaper (by about £800 over 5 years !)..... FD also offer free legal fees/survey etc, and if you pull out with a week to go....no charge. Tesco....£995 once its booked in. Also First Direct offer unlimited over payments, which is unusual.
Point is, its a good deal, if the sums add up for your personal circumstance, and how you see things panning out. Im voting hot
All comments (26)
It's more a question of the strength of the economy.
You need to look at your own personal circumstances to decide whether you want the security of knowing what you will be paying for 5 years, or if you're happy to accept the risk that things may go up (or down!) in that time.
For what it's worth, I don't believe house prices will plummet as the UK market is firmly weighted in the 'demand' side of the supply and demand argument.
Unless the next government suddenly decides to build millions of new homes overnight that is!
Without a clear understanding of what terms brexit will have on the table at the end of negotiations its all guess work.
For example, imagine if 10% of eu citizens cut their stay short or move to mainland Europe. The amount of properties freed up would be massive in the short term reducing prices and rent return.
Longer term we are in a country with a growing population and less land to build more homes than the majority of other similar countries, so the home shortage is likely to continue and prices will rise again once balance and certainty is restored.
This is all guess work...
If you're looking for expert opinion, search for reports from the major lenders - Nationwide and Halifax. But even that I would treat with caution. When interest rates fell to current levels in 2009, few people thought we would still see them this low 8 years later. Few experts predicted the Brexit result. Or the stock-market bounce resulting from fall in exchange rates.
Better advice might be to look at your own circumstances and the impact of big market changes: could you afford it if rates rise by, say, 2%. What if house prices fall by 25% (could be no effect if you have no plans to move for the foreseeable future). How secure is your job? And what would be your prospects if you did lose it?
I'm 3 months away from coming out of a 5 year fixed that was 5%, the money I'm going to be saving soon is ridiculous!
First Direct have a Fee Saver mortgage at 1.94%. OK, its higher %, but if you're borrowing say £100k, over say 25 years, then it works out about £15 a month more expensive. Most people will only keep fixed for the fixed term, in this case 5 years. So over the course of the 5 years, First Direct will be £15 * 12 (month) * 5 (years) = £900. More expensive ? No, because Tesco charges £995 for this mortgage, so makes it £95 more expensive.
It all depends on how much you borrow etc, how long you will keep the mortgage, maybe over 5 years potentially, so not saying FD is better, but be aware, and add the fee into your calculations and also the amount you borrow. If you're after 200k, then the Tesco one will be cheaper (by about £800 over 5 years !)..... FD also offer free legal fees/survey etc, and if you pull out with a week to go....no charge. Tesco....£995 once its booked in. Also First Direct offer unlimited over payments, which is unusual.
Point is, its a good deal, if the sums add up for your personal circumstance, and how you see things panning out. Im voting hot
What I found was on the run up to brexit vote costs of products rose, sterling dropped in value. We have 2 major changes potentially about to happen i.e. general election and brexit. Markets will respond accordingly which may force the bank of england to raise / lower rates. I dont see them lowering rates as this is historically the lowest they have ever been. What I see happening is round about 3-4 years time rates rising. They cant go on this low forever and there has been a few on the bank of england who are in favour at present or in the past to rise rates but didnt get enough of their coleagues to get the rates higher.
The market leading 2.49% 10 year deal is only .55% different between the 5 and 10 with unlimited overpayments from First direct. I see as I said earlier that rises will happen and by more than 1% between year 3-5 and will continue to rise and that is why I am currently going through a 10 year fixed. I am gambling that this happens and if I am right I will recoup any loss I make by not taking out that 5 year easily in year 5 onwards. Again your situation may be different from mine but its worth considering if only to rule in or out.
Question you need to ask is do you think in 5 years that the mortgages you will have to pick from if you need a mortgage will be less than .55% of a difference?
You also need to consider whether you are likely to want to move house in the next 2/5/10 years. Many mortgages are portable these days but if you plan to upsize (house and/or mortgage) as your next move, you could end up with a provider that won't lend the extra money to do so (i am told first direct have pretty strict criteria compared to others for example), thus having to pay the early exit fee, which in turn could eclipse any savings made from a long term fix.
Then my next paragraph about personal circumstance kicks in really.
If you have concerns that your house price will fall over the next 5 years significantly enough that you would move above 60% LTV, then surely you've answered your own concern that you should be trying to grab the best deal now to get that security back?
My 2 year fixed at 2.29% is finishing at the end of this month and I've got under 60% ltv left so house worth over 140k and left 65k on mortgage.
My current provider is offering 2.69% for 2 years with no fee.
What shall i do?
HSBC are offereing 1.14% with a £1k fee as an example.
The rate your being offered does seem high, which would suggest they are covering their fee within the rate.
The HSBC deal has almost the same fee, and lower rate. Because it's only for 2 years, it averages out at 1.9%.
(These calculations are only approximations - an accurate calculation is much more complex - but they're good enough for this purpose)
I would go for the Tesco deal:
- it's a low overall rate. Who knows how and when interest rates will move, but the prevailing view is that they will start rising in a couple of years
- it's a long fix so you get certainty and also don't need to think about refinancing for a long time. .