Cut your monthly mortgage payment while you still can

Christina Jordan rounds up April's top best-buy mortgage deals and shows you how to cut your monthly mortgage payment.

Spring has sprung, the mortgage market is recovering and lenders are launching juicy new deals. There’s a lot to smile about if you are a homebuyer or looking to remortgage. And it’s even getting better for first-time buyers too.

First-time buyer mortgage boost

In fact, according to figures released from the Council of Mortgage Lenders (CML) last week the number of first-time buyers in February was up 13% on January, and a massive 40% higher than last February.

Recent question on this topic

In terms of value the rises were even greater. The 12,600 loans advanced to first-time buyers during the month were worth £1.5bn, 15% up on value compared to January and a whopping 50% higher than a year earlier.

The increase is more pronounced because January actually saw a slump in first-time buyers, following the well-documented spike in December as buyers rushed to beat the Stamp Duty deadline.

As a result January figures were always going to look low, and therefore February figures had a good chance of bouncing back, but it’s still great to see that first-time buyers have returned to the market. Following the January blip it looks like things are back on track for a slow and steady recovery.

Mortgage lenders are doing their fair share to help, with more and more deals being launched for those with a small deposit. It’s now possible to borrow at under 5% with just a 10% deposit and if you can scrape together 15% upfront you can get mortgage deals at less than 4% interest.

Below are some of the best first-time buyer mortgages:

15 fantastic first-time buyer mortgage deals

LENDER

TYPE OF DEAL

RATE

FEE

MAX LTV

HSBC

Term tracker

4.49% (Base + 3.99%)

Fee-free

90%

Newcastle BS

2-year tracker

4.60% (Base + 4.10)

£694

90%

NatWest

2-year tracker

4.69% (Base + 4.19)

Fee-free

90%

HSBC

2-year fix

5.99%

£599

90%

Santander

3-year fix

5.99%

£495

90%

NatWest

5-year fix

6.39%

Fee-free

90%

Yorkshire BS

2-year tracker

3.79% (Base + 3.29)

£495

85%

Leek United BS

5-year discount

3.94%

£495

85%

First Direct

Term tracker

3.99% (Base + 3.49)

£499

85%

Yorkshire BS

2-year fix

4.49%

£495

85%

Chelsea BS

2-year fix

4.89%

Fee-free

85%

The Co-op Bank/Britannia BS

3-year fix

5.24%

£999

85%

Yorkshire BS

3-year fix with £500 cashback

5.59%

Fee-free

85%

The Co-op Bank/Britannia BS

5-year fix

5.64%

£999

85%

Yorkshire BS

5-year fix with £500 cashback

5.89%

Fee-free

85%

Compare mortgages at lovemoney.com

Buying mini-boom

The number of loans advanced for house purchase increased by 12% in February, according to the CML.

There were 35,000 loans advanced (worth £5 billion) which the trade body said signifies a modest recovery, although they were up by a significant 49% in volume and by 67% in value from a year earlier.

Related how-to guide

Cut your mortgage costs

Find out how to cut the cost of your mortgage by hundreds of pounds a month and become mortgage-free years earlier.

Those figures look better than modest to me but it’s worth remembering that February 2009 was a terrible month for the mortgage market so the year-on-year figures were bound to look pretty healthy compared to such a low.

The house purchase figures include both first-time buyers and home movers and it was the increase in first-time buyers mentioned above that helped boost house purchase numbers. Although it’s also true that the number of home movers increased, albeit by a smaller degree, rising 11% by number and 6% by value compared to January.

Affordability for home movers is currently good, says the CML, with an average loan-to-value ratio of 67% (meaning movers have an average deposit of 33%), average income multiple of just 2.81 and buyers spending a tiny 9.6% of income on mortgage interest payments.

Rise in switching

Purchasers have dominated the market in recent months as switching has slumped, but February saw the first increase in remortgaging for five months.

It was only a small rise, with the number of borrowers switching only edging up 2% to 24,000, a figure that is still weak by historic standards. Indeed, it’s expected that remortgaging will remain pretty low for the time being, at least while interest rates remain low. After all, why move your mortgage if your lender’s standard variable rate (SVR) is still extremely low as many are?

Finally, the CML noted that fixed rate mortgages remain less popular than in the recent past, accounting for 47% in February 2010, unchanged from January and the lowest share in around five years.

The share of tracker products in February was 36%, again unchanged from January, but remained at its highest level since the CML began recording this data in March 2005. Trackers are priced so competitively in the current market it is tempting for borrowers to go for the short-term savings. And with the economic landscape so uncertain, it’s perfectly possible rates could remain low for some time.

If you are thinking of changing your homeloan, either because you are moving house or just because you want to remortgage, there are now some really attractive rates on offer. Here’s some of the best current deals for those with at least 25% equity:

10 top variable deals

Lender

Type of deal

Rate

Fee

Max LTV

Alliance & Leicester Intermediary

2-year tracker

1.84% (Base plus 1.34)

2%

70%

HSBC

2-year discount

1.99%

£999

60%

C&G/Lloyds TSB

2-year tracker

2.29% (Base plus 1.79)

2.5%

75%

First Direct

Term tracker

2.39% (Base plus 1.89)

£499

65%

Earl Shilton

30-month discount

2.45%

£599

75%

Market Harborough

2-year tracker

2.48% (Base plus 1.98)

£1,250

75%

ING Direct

2-year tracker

2.49% (Base plus 1.99)

£795

60%

Yorkshire BS

2-year tracker

2.49% (Base plus 1.99)

£995

75%

HSBC

Term tracker

2.49% (Base plus 1.99)

£999

70%

The Co-op Bank/Britannia BS

3-year tracker

2.49% (Base plus 1.99)

£999

75%

Compare mortgages at lovemoney.com

10 fabulous fixed rates

Lender

Type of deal

Rate

Fee

Max LTV

Yorkshire BS

2-year fixed rate

2.99%

£1,795

60%

First Direct

2-year fix

3.09%

£998

65%

HSBC

2-year fix

2.99%

£999

70%

Post Office

2-year fix

3.15%

£999

75%

Leek United BS

3-year fix

3.90%

£495

75%

The Co-op Bank/Britannia BS

5-year fix

4.49%

£999

75%

Chelsea BS

5-year fix

4.59%

£995

75%

The Co-op Bank/Britannia BS

5-year fix

4.79%

Fee-free

75%

The Co-op Bank/Britannia BS

10-year fix

5.29%

£999

75%

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

Still need help?

If you need a bit more guidance on how to get the best mortgage, adopt this goal: Cut the cost of your mortgage and pay it off early

Next, watch this video: Getting through the mortgage maze

Then, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

John Fitzsimons looks at the dos and don’ts of arranging a mortgage over the internet.

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.

Mortgages suitable for first time buyers with a maximum 15% deposit, sourced based on lowest payrate. Where a provider's logo is displayed products may be applied for directly.

Offset

Mortgages with an offset facility attached, sourced based on lowest payrate. Where a provider's logo is displayed products may be applied for directly.

Comments


Be the first to comment

Do you want to comment on this article? You need to be signed in for this feature

Copyright © lovemoney.com All rights reserved.

 

loveMONEY.com Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FCA) with Firm Reference Number (FRN): 479153.

loveMONEY.com is a company registered in England & Wales (Company Number: 7406028) with its registered address at First Floor Ridgeland House, 15 Carfax, Horsham, West Sussex, RH12 1DY, United Kingdom. loveMONEY.com Limited operates under the trading name of loveMONEY.com Financial Services Limited. We operate as a credit broker for consumer credit and do not lend directly. Our company maintains relationships with various affiliates and lenders, which we may promote within our editorial content in emails and on featured partner pages through affiliate links. Please note, that we may receive commission payments from some of the product and service providers featured on our website. In line with Consumer Duty regulations, we assess our partners to ensure they offer fair value, are transparent, and cater to the needs of all customers, including vulnerable groups. We continuously review our practices to ensure compliance with these standards. While we make every effort to ensure the accuracy and currency of our editorial content, users should independently verify information with their chosen product or service provider. This can be done by reviewing the product landing page information and the terms and conditions associated with the product. If you are uncertain whether a product is suitable, we strongly recommend seeking advice from a regulated independent financial advisor before applying for the products.