Six Super Mortgages

by Christina Jordan on 17 July 2008  |  6 comments
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Here's a selection of appealing deals to help you fight the mortgage blues.

There is no such thing as the best mortgage, or even the best type of mortgage. On this website and others you will find contradictory articles and advice debating the issue. Some people think tracker mortgages are the best thing since sliced bread (myself included) while others believe that fixing now is the right course of action (and they are wrong).

Ultimately, it doesn't matter what any of us think, because the right mortgage is the one that suits your needs, your attitude to risk and your financial circumstances.

There is absolutely, categorically, in no way whatsoever a best mortgage.

However......

There are some good deals within their categories and below is a selection of six of my favourites.  I can guarantee that Fools will be able to find some deals with lower rates than my choices. In some cases I have gone for a good balance of rate, loan-to-value and upfront fee to suit those with more modest mortgages. Those products with incredibly low rates are probably more suitable for large loan borrowers, or they are only available to people with a whopping deposit.

There's a mix of fixed, trackers and discounted rates, none for those with a bad credit history (that's a whole other feature) but a few self-cert deals.

They are all available at time of writing but in the current market they may not be about tomorrow.

The tracker

My pick of the bunch. HSBC has a lifetime tracker at 5.99% (0.99% above Base Rate).

It comes with no arrangement fee and unlimited overpayments are allowed. Plus it's portable and is available to those with just a 10% deposit. It also has no early repayment charges. What more could you want?

Well, if you want a similar deal at a slightly lower rate, Woolwich's fee-free lifetime tracker is currently 5.89%. However, you need a 40% deposit to secure this one.

The discounted variable rate

Again HSBC leads the field on discounted variable rates with its 5.69% two-year discount, reverting to a (current) rate of 6.25%. Available to up to 90% loan- to-value this is suitable for first-time buyers or those with little equity in their property and comes with a teeny weenie £249 fee. If you want an even better rate and you can afford to pay a fee of £2,499, HSBC is offering a two-year discount at just 4.99%, or one at 5.49% with a £999 fee.

The short-term fixed rate

First Direct's two-year fixed rate of 5.98% is a good rate but with a high-ish fee of £1,499 plus £499 booking fee. It's available to those with a 20% deposit and is an offset mortgage so customers can use savings and current account credit to offset against their mortgage debt. The bank also offers a slightly higher rate -- 6.39% in exchange for a much lower fee of £399 plus £99 booking fee.

Market Harborough Building Society has a great two-year fixed rate, low fee deal. Its 5.99% two-year fix is available up to 80% loan-to-value on mortgages up to £300,000 with an arrangement fee of £749.

The long(er)-term fixed rate

Fixing for the longer term at today's high rates is an option that few borrowers will currently be comfortable with, but if that's what you fancy my money is on Leeds Building Society's  low rate five-year fix at 5.99%. Available to those with a 20% deposit it carries a £1,499 fee and is available on mortgages up to £250,000.

If you have a small deposit still but want a long-term fix, Britannia Building Society's five-year rate of 6.74% goes up to 90% loan to value, with a low fee of £499.

The large loan

Stealing the march on large loans at the moment is a Charcol exclusive at just 4.99% -- that's right, under 5%. This loan is targeted at extremely high-net-worth borrowers -- £500,000 minimum to £5m. In addition it comes with a stinger of a fee, 2.75% of the loan, which will amount to tens of thousands of pounds. But if you are borrowing big, it could be worth it for the excellent rate. Another stipulation is that you need a 35% deposit.

For a large loan with a much smaller fee Bank of Scotland has a three-year tracker at 6.19% with a fee of just £1,499. It is available to those with a 25% deposit or more on loans over half a million pounds, and must be arranged through a mortgage broker.

The self-cert deal

Self-cert deals, for those who cannot or prefer not to have to prove their income, are much more expensive than mainstream deals.

Bank of Scotland's five-year tracker is competitive at 6.69% up to 75% loan to value, and comes with a fee of £999 of the loan, which is not bad at all for self-cert lending.

Fixed rates come in at around 7.39% and Bristol & West offers a five-year fix at this rate with a 1.5% fee. Again you'll need a 25% deposit. The lowest self-cert rate I could find was a two-year tracker at 5.99% from Nationwide brand The Mortgage Works (available through brokers) but comes with a whopping 2.50% fee and you need a 50% deposit.

If you know of any great mortgage deals out there, let us know.

If you'd like help picking the right mortgage for you, contact The Motley Fool Mortgage Service where a broker can help you get the best deal.