Tesco Bank unveils mortgage range
Tesco Bank, the retail banking arm of Tesco, has launched a suite of competitive mortgage products.
The retail bank has unveiled a range of two-, three- and five-year fixed-rate mortgages, plus a two-year base rate tracker.
Rates begin at 3.19% for the two-year fix, rising to 3.89% for a five-year fix, which although competitive, is still some way off rival HSBC's lowest-ever five-year fix of 2.99%.
Tesco Bank will lend up to a maximum of 80% loan-to-value, and a flat arrangement fee of £195 applies to all mortgages.
The bank will charge a product fee of either £0 or £800 for each mortgage. Customers who choose to pay the higher product fee benefit from a slightly lower APR over the term of the mortgage.
In addition, Tesco Clubcard holders can collect one point for each £4 on their monthly mortgage repayments.
Philip Clarke, chief executive of Tesco, says the launch marks a "major milestone" towards offering Tesco customers a "full retail banking service".
Andrew Hagger, spokesman for Moneynet, welcomes the bank's entrance onto the mortgage market.
"Consumers should benefit from the extra competition that Tesco Bank will bring to the mortgage sector as it battles for new business with the established high-street lenders," he says.
Hagger adds: "Tesco Bank already has a solid reputation for good value personal finance products, frequently appearing towards the top of the best buy tables in the savings, personal loan and credit card markets.
"The combined mortgage package of competitive rates, flexible product features plus the ability to earn rewards is likely to appeal, particularly to the millions of loyal Tesco Clubcard customers."
Meanwhile, Tesco Bank is mulling over launching current accounts. It is currently running two in-store pilot bank branches, which if successful, could be rolled out across the country.
This article was taken from our sister website, Money Observer.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.
A charge some brokers (and, increasingly, lenders) make for arranging your loan or mortgage, either as a flat fee or a percentage of the amount you wish to borrow. In order to look ultra-competitive in the best-buy tables, some mortgage lenders will offer mortgages with an attractive low rate and recoup any losses with a hefty arrangement fee.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.