HSBC launches lowest five-year fixed rate mortgage
Borrowers can lock in at under 2.5% for five years.
HSBC has launched a market-leading five-year fixed rate mortgage.
It’s offering a rate of 2.48%, fixed until 28th February 2020, to borrowers with a 40% deposit.
The deal comes with a £999 fee and is available for purchase or remortgage on borrowing of up to £500,000.
The mortgage is portable so you can take it with you if you move house. But there is a 1% early repayment charge if you redeem the loan before the end of the deal or exceed your monthly repayments by more than 20%.
Should you fix for five years?
With a five-year fixed rate mortgage you get long-term peace of mind that your monthly repayments will remain the same for a while, which can help you budget and plan for the future. Plus you don’t have to worry about the cost of remortgaging every few years.
However, you tend to pay a premium for the security and peace of mind that longer term fixed rate deals offer compared to shorter fixed rate alternatives.
For example right now you can get a two-year fixed rate of just 1.43% (with a £1,995 fee) from the Post Office on the same 60% loan-to-value (LTV).
On a £150,000 mortgage taken out over 25 years, this means you pay £595 a month compared to £671 a month with HSBC’s 2.48% five-year deal.
However, with the Base Rate expected to rise next year mortgage rates will follow, so it might be worth paying a bit more now, to lock in and avoid facing higher rates later on.
The other feature to watch out for are the severe early repayment charges long term fixed rate deals tend to charge. These kick in if you choose to leave a deal early or make big overpayments (usually over 10% of the capital outstanding in a year).
Best five-year fixed rate mortgages
If you like the sound of a five-year fixed rate mortgage here are the lowest rates available right now across a range of LTVs.
|
Lender |
Rate |
Fee |
LTV |
|
2.48% |
£999 |
60% |
|
|
Leeds BS |
2.59% |
£1,999 |
65% |
|
Woolwich |
2.79% |
£999 |
70% |
|
2.75% |
£2,000 |
75% |
|
|
Leeds BS |
2.94% |
£1,999 |
80% |
|
3.49% |
£995 |
85% |
|
|
2.89% |
£1,675 |
90% |
And here are the best deals available across a range of LTVs with fees under £500.
|
Lender |
Rate |
Fee |
LTV |
|
2.79% |
£0 |
60% |
|
|
2.79% |
£499 |
65% |
|
|
HSBC* |
2.89% |
£499 |
70% |
|
2.89% |
£195 |
75% |
|
|
3.09% |
£199 |
80% |
|
|
3.59% |
£195 |
85% |
|
|
Chelsea BS |
3.24% |
£475 |
90% |
*Must hold a HSBC current account.
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