Metro Bank, Virgin Money, Tesco Bank: are their mortgages any good?

New mortgage lenders like Metro Bank, Virgin Money and Tesco Bank are putting out some good deals. And they might be easier to get than other similar deals.

Metro Bank, Virgin and Tesco are some of the newest entrants to the mortgage market, and banking in general.

Let's take a look at how these new mortgage providers' products compare to each other, and the rest of the market.

Metro Bank

Metro Bank has made a big impact in its short existence as the first new high-street bank in more than 100 years. It appears to be living up to its promises of delivering an extremely good customer experience with ground-breaking service.

It offers five different two-year fixed and tracker mortgages, and one five-year tracker mortgages.

Some of the main points:

• Prices range from around 3% to 3.7%.
• You have to pay a booking fee of £1,000 “on application”. That should worry you, but if you apply in branch and get the bank to approve it simultaneously, that doesn't have to be a problem in itself.
• You pay the normal, hefty, early-repayment charges for leaving during the deal period.
• Free valuation and legal fees.
• You can get a mortgage up to 80% loan-to-value (LTV).
• You need to have a Metro Bank current account, which pays you no interest.

Virgin Money

Virgin's mortgages still haven't been rebranded from Northern Rock. Like most mortgage lenders, it offers a confusing array of them, but I've picked out some of the better ones for the comparison table below.

All its mortgages are two-, three- and five-year fixes, or two- and three-year trackers. Five-year fixed mortgages are the most rational choice right now, but “rational” does not necessarily mean they'll work out cheaper over the period. No one knows what will be cheaper. You can read some of the reasons longer deals are more rational in There are only two mortgages worth buying.

The prices are competitive and better than Metro Bank's if you want a low LTV, but not so competitive if you need a high LTV mortgage.

Some of the main points:

• Prices range from around 2.9% to 6.4%.
• I estimate fees are typically £1,500*, although the lender offers mortgages with no fees and higher interest rates, which could work out cheaper for smaller mortgages.
• Normal, hefty, early-repayment charges.
• Overpayments of 10% per year allowed.
• You can get a mortgage up to 90% LTV.

About Tesco's mortgage deals

This supermarket requires no introduction, so I'll cut to the chase.

It offers two-, three- and five-year fixes, and two-year trackers. I've tried to pick a good selection in the table below. Similar to Virgin, there are equivalents with much lower fees, but these naturally come with higher interest rates.

Tesco's five-year deals are the best, but its two-year deals are more patchy.

Some of the main points:

• Prices range from around 2.9% to 4.6%.
• I estimate fees* are typically £1,000 for remortgagers and £1,400 for buyers.
• Free valuation and legal fees for remortgagers.
• Normal, hefty, early-repayment charges.
• Overpayments of 20% per year allowed.
• You can get a mortgage up to 80% LTV.

How they compare to the market

In my research, the rest of the market usually had better deals in all categories and all LTVs, as you can see from the tables below. However, scan the tables for the LTVs relevant to you, and you'll see that some of the deals from the new banks are only more expensive by a few hundred pounds, usually because of the fees.

The big surprise was Tesco Bank's five-year fix at 70% LTV. In my search, I couldn't find a cheaper similar mortgage elsewhere, based on a £150,000 property.

Some of the competition comes from small lenders, so they have little to lend out. This means that, even if they offer cheaper deals, you might have a better chance with one of the new guys. A broker could help you, without you having to apply individually.

Two-year deals

Five-year deals

*Just including the booking and arrangement fees (which sometimes go under other names), and estimated legal fees and valuation fees. Most other fees/costs you might get are usually pretty standard and not worth comparing here.

Use lovemoney.com's innovative new mortgage tool now to find the best mortgage for you online

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

More on mortgages:

Noose tightening around interest-only mortgages

Buy a property without a deposit

Seven reasons mortgage lenders turn you down

How much will your mortgage cost

The true cost of a month's mortgage payment holiday