Clydesdale and Yorkshire Banks have launched a new range of mortgages which cover your first month of repayments. But are they any good?
Clydesdale Bank and Yorkshire Bank are offering to pay one month of your mortgage repayments on its new mortgage range.
You have until 28th November 2014 to take advantage. Just bear in mind that they’ll only cover up to a maximum of £1,000.
The banks have launched a number of new deals which qualify for offer, which I’ve detailed below
|
Mortgage term |
Maximum loan-to-value |
Rate |
Mortgage fee |
|
Two-year fixed rate |
85% |
2.89% |
£999 |
|
Two-year fixed rate |
90% |
3.39% |
£999 |
|
Five-year fixed rate |
85% |
3.99% |
£999 |
|
Five-year fixed rate |
90% |
4.19% |
£999 |
There are also fee-free versions, where the rate jumps by 0.2%-0.3%.
After the introductory period, you’ll move on to the bank’s Standard Variable Rate (SVR) which is 4.95% for both Clydesdale Bank and Yorkshire Bank. You’ll be notified of your fixed term ending two months beforehand and you can either carry on as you are or switch to a new fixed rate deal. If you opt for the latter, you may have to pay another arrangement fee.
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Cheaper deals, free from 'free' gifts
So how do the Clydesdale mortgages compare?
Let’s focus on the mortgages at 85% loan-to-value. With Market Harborough Building Society you can get a two-year fixed rate at 2.65%, with a fee of just £250.
If we take the example of a £150,000 mortgage over a 25-year term, the Clydesdale mortgage will cost you £709.07 a month. Over two years, with the fee on top but one month’s repayment removed, that will set you back £17,308. But with the Market Harborough deal, that repayment drops to £690.14, meaning a total of £16,813. That’s a saving of £500.
What about the five-year deal? Again, let’s stick with the 85% loan-to-value mortgage. The Clydesdale mortgage will set you back £799.30 a month. So over five years, with the fee added on but a month’s repayment removed, it will cost you £48,158.
Chelsea Building Society has a five-year fixed rate at 3.64%, and a fee of £1,675. The monthly repayments work out at £770. So five years of repayments plus the fee come to a total of £47,875, saving you £283.
As you can see, even with a month’s repayment handed back, the Clydesdale and Yorkshire mortgages can still be beaten, albeit by relatively small sums.
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The mortgage incentives grab
The competition on the mortgage market is fierce, so providers do what they can to attract potential borrowers.
Similar to this Clydesdale and Yorkshire Bank's deal, TSB is offering to pay £2,500 towards your first year of Council Tax bills. Meanwhile Lloyds is giving away an iPad Mini.
Smaller lenders are putting up some tough competition too. Cumberland Building Society has a cashback offer worth 4% of your mortgage advance.
The incentives push is nothing new. In the past, Halifax and TSB have offered to cover Stamp Duty for buyers and West Bromwich Building Society even offered its borrowers a new Rover car with its mortgages back in 2004.
Why free gifts aren’t really worth it
Although it looks appealing at the time, these deals are often not free at all. They’ll bump up the price of your interest and repayments so it’s best to steer clear of any gimmicks. In the case of the iPad Mini, it’s a good idea to get a cheaper mortgage and buy the iPad with the money you save.
If you want to scout about for better rates, head over to the lovemoney.com mortgage centre.
Would you go for this offer? Let us know in the comments below.
More on mortgages:
HSBC launches 0.99% discounted variable mortgage
Fixed mortgages drop ahead of base rate change
How to cope with interest rate rises on your mortgage
Bank of England requests more powers to curb mortgage lending