Tesco shakes up mortgage market
Tesco Bank has launched one of the cheapest mortgage deals ever with a rate of just 1.99%.
The two-year deal is fixed until the end of 2014 and is a product of the government's "Funding for Lending" scheme, through which the high street giant has pledged to lend £1 billion in the next year.
But, for borrowers intending to rush out and grab this deal while they still can, there is a catch: it is only available to those with a 40% deposit and is subject to fees of £995.
This latest offer is a reduction of 0.65% on its previous best fixed-rate deal and comes with the benefit of Clubcard points on payments and overpayments.
Leeds Building Society is the only other lender to have offered a rate of 1.99%, that was last year but the fee was a hefty £1,995.
The mortgage market is still not providing any relief to first-time buyers looking to get a foot on the ladder, but for those who are interested in remortgaging and have the cash to fund the product fee this could be a real money saver.
For those with just a 10% deposit the best two-year fixed-rate deal is more than double at 4.2% from Market Harborough Building Society, with an application fee of £395.
For an 80% loan-to-value mortgage the rates improve; Halifax is the best two-year fixed deal here currently at 2.44% but with a heavy £1,995 application fee.
This article was taken from our sister website, Money Observer.
Changing mortgages without moving home. Property owners chiefly remortgage to get a better deal but some do so to release equity in their homes or to finance home improvements, the costs of which are added to the new mortgage. Even though you’re not moving house, you still need to engage solicitors, conveyancing and the new lender will require the property to be surveyed and valued.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.