Over on Which4U, we’ve started a monthly ‘What’s Hot’ review of the best mortgages available on the market. It won’t surprise most readers to learn that many of these offers are provided by mutuals rather than by major banks. And though eligibility for these offers tends to be limited to those based solely in the vicinity of the lender, there is far greater coverage than many will suspect. Check out some of the highlight offers below.
60% / 65% LTV
Skipton Building Society has launched a 2-year tracker deal at just 1.78%, which enters at the top end of the market. The initial rate falls slightly behind HSBC, but the fee of £995 outstrips rivals, who (with the exception of Nationwide and the Post Office) are charging £1,500 or above.
If the Bank of England is able to hold off on raising interest rates until 2016 (though it’s hardly a certainly), it’s the ideal window of opportunity for a cheap tracker mortgage, and such low-cost deals won’t last much longer.
The Norwich & Peterborough Building Society is offering an impressive 65% LTV 2-year fixed-rate mortgage at just 1.99%, taking the fight to the major banks in the lower-risk mortgage sector. The fee of £295 offers terrific value compared to similar products in this sector, where fees are now sky-high.
For this low-risk category, major banks are offering lower rates but much higher fees. Mortgages like N&P’s become most competitive when the value of the loan is smaller (up to £200,000), because it’s only when borrowing large sums that the lower rate is able to offset the high product fees (of up to £1,999) over the course of the offer period. For lower value loans, a slightly higher rate and lower fee can prove a better option.
Our guide to mortgage arrangement fees offers an example of how favourably this N&P mortgage compares to larger rivals.
70% / 75% LTV
The latest full refresh of the Post Office’s mortgage portfolio this autumn has seen its best 75% LTV two-year fix fall to just 1.98%.
The £995 mortgage arrangement fee remains some distance below the lofty sums currently charged by Accord and the Chelsea Building Society, which makes the new Post Office deal among the most competitive products on the market for this loan-to-value.
The Barnsley Building Society, a subsidiary of the Yorkshire Building Society, is offering a 2-year tracker mortgage at 2.09%.
As a tracker mortgage, this doesn’t offer the security of fixed payments that the Post Office’s fixed-rate mortgage does for the same loan-to-value equity. But its lower fee of £845 is welcome and keeps this a very attractive offer for those with a 25% deposit.
80% / 85% LTV
Homebuyers in the West Midlands can benefit from a new addition to the West Bromwich range: a 2-year fixed rate deal at 2.39% for those with a 20% deposit.
The mortgage is available only as a house-purchase offer, and is not available as a remortgage option, but it proves an excellent offer in the current marketplace for this loan-to-value range.
Though there are no extras included, the low fee of £299 will help to ease much of the pain.
This fee-assisted mortgage is a similarly attractive mortgage offer for those situated in the North West and Cumbria. A free standard valuation is included for properties under £500,000, and customers can overpay up to 5% of the original loan each year without extra charges. The product is also ‘portable’, which means it can be carried over to a new home, subject to acceptance.
This 2-year tracker mortgage at 2.99% with no application fee is a very strong option for this loan-to-value range. Loans above 75% LTV are restricted to applicants in the Midlands counties (unless an existing borrower), but this still covers a fair amount of territory – from Herefordshire through to Nottinghamshire. Prospective borrowers can enquire about their eligibility with the lender.
The Hanley Economic Building Society has recently added a new 2-year fixed rate product at 3.39% to its portfolio for October.
Based purely on initial rate, the mortgage is outperformed by others in the 85% LTV sector, such as the Chelsea Building Society. However, with no booking or arrangement fee (compared to Chelsea’s’ £1,545), and a healthy incentive package (including free standard valuation), this option will be difficult to beat for overall cost over the two years.
90% / 95% LTV
Monmouthshire Building Society’s new 3-year mortgage range includes outstanding deals for first-time buyers. Fixed-rate deals are available at 4.39% for buyers at 90% LTV, and 4.65% at 95% LTV. But those willing to risk an interest rate rise through a variable rate deal can save an additional 0.90%, reducing the cost to just 3.49% and 3.75% respectively.
The mortgages are only available for a maximum loan of £200,000, and are limited to home buyers in the vicinity of the society’s branches (the postcode areas of Newport, Cardiff, Swansea, Llandrindod Wells, Worcestershire, Gloucestershire, Herefordshire and Bristol). But with no product fee and no early repayment charge on the variable rate selection, anybody who meets the requirements will struggle to find a better offer elsewhere.
The Leicestershire-based Hinckley & Rugby Building Society is among the front-runners for high loan-to-value mortgages. A tracker mortgage at 90% is available at just 3.75% for two years for a fee of £295.
Though HSBC offers a lower headline rate for this loan-to-value (3.59%), the £1,499 fee is a hefty addition and is unlikely to provide the best value for money given the size of the loans that will be advanced to first-time buyers.
Hinckley & Rugby only charges property assessment fees where the valuation exceeds £1 million, while it also offers a free admin fee for remortgage arrangements.