John Fitzsimons hunts out the mortgage rates which should be top of your wish-list if you're about to buy a property.
It's not quite as depressing writing about the housing market as it was at the start of the year. According to the latest figures from Halifax, house prices went up for a fifth straight month in November, with prices up 4.2% since the start of the year.
And now Moneyfacts, the mortgage information firm, has revealed a healthy increase in the number of mortgage deals available since Bank Base Rate first fell to 0.5%, from 1,209 to 1,624.
While there are more mortgages to choose from, are they any good? Here's my guide to the best mortgages around, no matter what your circumstances are!
For those with a small deposit
While things have certainly improved over the last few months, if you only have a small deposit at your disposal you still don't exactly have a huge number of choices. However, the products on offer are improving. Remember though that if you want the security of a longer-term deal, at the moment you are going to be paying a premium for it.
The table below covers my favourite mortgages for those a deposit of 20% or less.
|
Provider |
Mortgage type |
Loan-to-value |
Interest rate |
Product fee |
|
Newcastle Building Society |
Two-year base rate tracker |
80% |
2.49% (Bank Base Rate + 1.99%) |
£1,094 |
|
Newcastle Building Society |
Two-year fixed |
80% |
3.65% |
£894 |
|
Yorkshire Building Society |
Three-year fixed |
85% |
5.84% |
£0 |
|
Alliance & Leicester |
Two-year tracker |
85% |
3.89% (Base Rate + 3.39%) |
2% of the advance |
|
Nationwide Building Society |
Two-year tracker |
90% |
4.63% (Base rate + 4.13%) |
£995 |
|
Chorley & District Building Society |
Two-year fixed |
90% |
4.99% |
£145 plus 0.75% of your advance |
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While these deals are all pretty decent, they are nowhere near as good as those on offer with a larger deposit. If you need some help building up your savings, why not follow the tips in our goal Build up your savings, and you'll soon have a much healthier looking deposit!
The short-term tracker
The rates on offer start to look a lot more attractive if you have more cash to stump up initially as your deposit.
In my view, while trackers look fantastic at the moment, Bank Base Rate is only likely to go upwards, so you don't want to be on a variable rate for too long. As a result, I've limited the length of these variable deals to an absolute maximum of three years.
|
Provider |
Mortgage type |
Loan-to-value |
Interest rate |
Product fee |
|
Woolwich |
One-year tracker |
60% |
1.98% (Base Rate + 1.48%) |
£999 |
|
HSBC |
Two-year discounted variable |
60% |
2.49% (A discount of 1.45% from the HSBC variable rate) |
£999 |
|
Alliance & Leicester |
Two-year tracker |
70% |
2.59% (Base rate + 2.09%) |
£1495 |
|
Abbey |
Two-year tracker |
70% |
2.69% (Base rate + 2.19%) |
£995 |
|
ING Direct |
Two-year tracker |
75% |
2.74% (Base rate + 2.24%) |
£795 |
|
Alliance & Leicester |
Three-year tracker |
75% |
2.59% (Base rate + 2.09%) |
2% of your advance |
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If you do go for a short-term tracker, it's important to take advantage of the cheap monthly payments you'll face initially by overpaying, in order to build up your equity and avoid negative equity.
If falling into negative equity is a concern for you, be sure to watch this video: How to...get out of negative equity
Long-term fixed rates
I'm a big advocate of long-term fixed rates, particularly with Base Rate so low. Chances are, in a couple of years you won't be able to get your hands on such cheap long-term deals, so I reckon it's well worth going with a longer-term deal.
These are my favourite deals of at least five years, across a range of different loan-to-values.
|
Provider |
Mortgage type |
Loan-to-value |
Interest rate |
Product fee |
|
HSBC |
Five-year fixed |
60% |
4.95% |
£999 |
|
Leeds Building Society |
Five-year fixed |
75% |
4.75% |
£999 for loans of upto £500,000. £199 + 1% of advance for loans more than £500,000 |
|
Newcastle Building Society |
Five-year fixed |
80% |
4.89% |
£588 |
|
Skipton Building Society |
Seven-year fixed |
75% |
5.94% |
£895 |
|
Britannia Building Society |
Ten-year fixed rate |
60% |
5.49% |
£599 |
|
Chelsea Building Society |
Ten-year fixed rate |
75% |
5.69% |
£995 |
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The Brit favourite - short-term fixes
No matter how sensible it might be to fix for the long-term, historically a Brit's favourite type of mortgage is a short-term fixed rate, allowing them to remortgage every couple of years. And it's in this area where the lenders have begun competing for business again, with frequent rate cuts in recent weeks.
Below are the most competitive two-year deals around - you won't find a better deal if you're after a short-term fixed rate!
|
Provider |
Mortgage type |
Loan-to-value |
Interest rate |
Product fee |
|
Leeds Building Society |
Two-year fixed |
65% |
2.99% |
£199 |
|
Alliance & Leicester |
Two-year fixed |
70% |
3.15% |
2% of the advance |
|
Yorkshire Building Society |
Two-year fixed |
75% |
3.59% |
£195 |
|
Newcastle Building Society |
Two-year fixed |
80% |
3.65% |
£994 |
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Get help from lovemoney.com
If you are in the process of buying a home, there's a range of different ways lovemoney.com can help!
First off, why not try some of the hints and tips in our goal: Cut your mortgage costs and pay off your mortgage early
Next, have a watch of this video: The best three-year tracker mortgage around
And finally, if you have some mortgage related questions that need resolving, why not see if your fellow lovemoney.com readers can help in our Q&A section.
Compare mortgages at lovemoney.com
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 4045 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 will revert to the lender's standard variable 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.
More: Boost your property's value by £20,000 | Is it safe to stay on SVR?