See the best mortgage rates around to help you move up the property ladder.
When moving house, you’ll hopefully have a decent equity stake in the property you’re selling - so you’ll be in a strong position to secure a cheaper mortgage.
We’ve looked at the bank and building society market to find some of the best deals when buying your next home. These picks are our Moneywise Best Buys.
Our example buyer is considering a £300,000 property purchase. They are borrowing at 60% loan to value (LTV) as the buyer has £120,000 from the sale of their previous home. They’ve chosen a 25-year mortgage term.
Best two-year mortgage fixes
First Direct, up to 60% LTV, 1.54%
Fixed for two years then reverts to SVR (currently 4.19%)
This mortgage from First direct comes with a rate of 1.54% fixed for two years and a total annual cost of £8,679. This includes no scheme fees with monthly repayments of £723.
Skipton Building Society, up to 60% LTV, 1.56%
Fixed until 28 February 2022 then reverts to SVR (currently 4.99%)
This mortgage from Skipton comes with a rate of 1.56% fixed for two years and a total annual cost of £8,700. There are no scheme fees and monthly repayments are £725.
Fix your mortgage for longer
It’s possible to lock in a mortgage rate until 2029, which can ensure you know exactly what your repayments will be. These deals are cheaper than ever before, but the security of knowing what you’ll pay for a long period doesn’t come cheap – rates are much higher than with shorter deals.
First Direct, up to 60% LTV, 1.49%
Fixed for five years, then reverts to SVR (currently 1.49%)
This mortgage from First Direct comes with £732 in monthly repayments for an annual cost of £8,781.
Santander, up to 60% LTV, 2.29%
Fixed until 2 April 2030, then reverts to SVR (currently 4.00%)
With a 10-year fixed rate at 2.29%, with fees of £49 the monthly repayments are £789, equal to £9,468 a year. When the fixed rate period ends in 2030 monthly repayments will increase, assuming rates don’t change and our buyer hasn’t switched to a better deal.
Variable rate mortgages
If you think the Bank of England’s base rate is likely to stay the same or fall then a variable rate could be for you. However, be aware that rates could rise at any time and leave you out of pocket.
Hanley Economic Building Society, up to 60% LTV, 2.19%
3.25% discount for two years then reverts to SVR (currently 4.24%).
This is currently the cheapest variable deal at 2.19%. Monthly repayments are £780 with no fees and cashback of £1,000 - this means an annual cost of £8,871.
Interest-only mortgage deals
If you’re looking for interest-only options, remember the rules are now a lot stricter and you’ll need to show a well-thought out plan for repaying the capital at the end of the mortgage. Monthly repayments are much lower than with capital repayment, but you'll pay more interest on an interest-only mortgage in the long run.
Not every provider will lend on an interest-only basis, so if you’re looking for one it’s best to speak to a mortgage broker. Our mortgage tool can help you get a feel for the rates on offer.
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Call free on 0800 073 1936 or see mortgage best buys online.