Top deals for loyal customers

You can get better mortgage deals from some lenders if you already bank with them. But is it a good idea?

For many of us, the only ‘perk’ we get from our bank is that we regularly have post to open, as we are bombarded with information about this credit card or that loan.

However, some banks now offer better mortgages to those borrowers who already bank with them in some capacity.

Santander exclusives

One lender that has been very keen on the idea lately is Santander, who last week launched a new range of both fixed and tracker rate remortgage deals to current account and investment customers.

The deals are a very competitive two-year tracker at 2.30% (base rate + 1.80%) up to 70% loan-to-value, with a fee of just £995, as well as a three-year fixed mortgage at 3.59% for borrowers with a 40% deposit and a £995 fee, and a five-year fixed mortgage at 4.24% for borrowers with a 40% deposit and £495 fee.

To qualify you’ll need to have held a current account with the bank for at least three months, or hold a qualifying investment account.

A growing trend

Santander isn’t alone in seeing this as a way of attracting us into borrowing from them. Halifax offer a discount of 0.2% on mortgages if you already hold a current account with them, while Barclays boasts a number of different ‘loyalty mortgages’ which are only open to those who have an open current account with the bank which has credited with a minimum of £800 in each of the preceding three months.

Earlier this year Norwich & Peterborough Building Society also launched a loyalty mortgage for customers who held any other Norwich & Peterborough product.

However, my favourite exclusive deal is a first-time buyer mortgage from Coventry BS, who offer a five-year fixed rate at 90% loan-to-value with an interest rate of 5.69% and a booking fee of a paltry £199.

The mortgage even comes with a £500 Ikea gift card (and what first-time buyer doesn’t buy their first lot of furniture from Ikea?!), but what I really like about the deal is that it’s not down to you to have an account with the mutual – so long as your parent, grandparent or guardian has held a savings, current account or mortgage with the building society for the last three years, you still qualify!

Why it’s good for you

This idea of exclusive mortgage deals is obviously an attractive one for many of us. You get a better rate than other customers, just because you already bank there!

And it also appeals to those of us that like an easy life and want to deal with as few financial institutions as possible.

Why I’m not a fan

Taking out a mortgage is a big commitment, and it’s one that we should all make with our eyes wide open. That means ensuring we know exactly how much it is going to cost us in the long run, as well as whether it’s truly the best deal for our circumstances.

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And for me, that means shopping around for the best deal, regardless of whether it's sold to me as an 'exclusive reward' for being loyal or not.

After all, just because the lender says it's amazing deal, it doesn't mean it actually is.

The best way to shop around

Of course you can shop around on your own, but my own preferred method is to utilise an independent mortgage broker. A broker will be able to tell you not just how competitive the mortgage is, but also how likely the bank is to want to deal with you. Because while the bank may entice you through the door by offering you a better rate because you're a loyal customer, that’s no guarantee that they will accept your application! And a rejection leaves a nasty black mark on your credit record.

Far better to make the most of a broker’s advice and guidance, so you know just how competitive that offer really is, and apply for a mortgage from a lender that will appreciate your business!

To speak to our fee-free mortgage team, head over to our mortgage centre where you can pick their brains via email, instant messenger or over the phone.

More: Why you pay more tax than banks | The Tesco Clubcard crisis

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term may revert to the lender's standard variable rate or a tracker rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.

Your home or property may be repossessed if you do not keep up repayments on your mortgage.