The cheapest mortgages on the market
We go through the small print to find the best deals in the market today
The mortgage market is a very competitive, and at times confusing place. So I've decided to try to find the best possible deal for a variety of different borrowers.
Fixed deals
Fixed deals have got more expensive in the past four or five months, because borrowers have pre-empted interest-rate rises by fixing early, and lenders have sold out their allocated budget for these cheap fixes, replacing them with more expensive products. Let that be a warning to anyone else dithering about fixing.
Related blog post
- John Fitzsimons writes:
The long-term vs short-term fixed mortgage dilemma
Does it make more sense to go for a short-term fixed rate, and shop around for a cheaper deal in a couple of years, or secure a decent rate for the long term?
Read this post
For shorter fixes of two to three years, you should look to Cheltenham & Gloucester, the Post Office, Santander, Lloyds, Norwich & Peterborough, Hanley Economic Building Society and Yorkshire Building Society (not to be confused with Yorkshire Bank). You can see interest rates and fees in the tables below.
First-time buyers with deposits of just 10% face huge costs for short-term fixes and so they should be avoided if possible. And anyway, short-term fixes in the current environment are not a great option for most people.
Longer fixes are still good value for money, even though that doesn't mean they will necessarily work out cheaper than variable deals in the long run.
For five-year fixes, look to the Post Office, HSBC, first direct, Northern Rock, Co-operative Bank, Britannia and Nottingham Building Society. For ten-year fixes, you have little choice but to go to Britannia, Yorkshire Building Society or Co-operative Bank, but they are still my favourite mortgages, provided your circumstances are right. (Read Pay 5% on your mortgage for a decade for more on that.)
Tracker deals
Variable deals are still considerably cheaper than fixed ones, although that may change quickly when borrowers and lenders see imminent interest-rate rises on the cards. follow the Bank of England's base rate, e.g. the base rate (0.5%) plus three percentage points. There are other variable deals called discounted variable products. I don't like them, because I don't like products where the lender can increase the interest rate at any speed it sees fit, and whenever it likes. Hence, I'm writing about trackers only.
John Fitzsimons looks at the dos and don’ts of arranging a mortgage over the internet.
Tracker deals
The standout tracker is HSBC's lifetime tracker, which has no early-repayment charges. It is cheaper than every other tracker in most circumstances, regardless of how long you would like to track for, be it two years, ten years or 25 years. You can get the mortgage with a lower rate and higher fees, which is cheaper if you end up holding on to the deal for longer.
The main competitor I could find for HSBC's tracker is Leek United, which has a tracker that will beat HSBC's over a three-year period.
The tables below are accurate at the time of writing, but given the speed at which products are launched or withdrawn, it's possible I may have overlooked a mortgage or two that should be on this list. Please use the comments box below to let me and other readers know if you think I've missed out any important points or overlooked any good mortgages.
First-time buyers
|
Mortgage |
Cheapest over |
Interest rate |
Arrangement fee |
LTV |
|
2 years |
5.45% |
£100 |
90% |
|
|
3 years |
5.1% |
£900 |
90% |
|
|
5 years |
5.9% |
£850 |
90% |
|
|
2-25 years |
4.3% |
£100 |
90% |
|
|
2 years |
4.18% |
£1,000 |
85% |
|
|
3 years |
5% |
£500 |
85% |
|
|
5 years |
5.2% |
£800 |
85% |
|
|
2 years |
4.3% |
£100 |
85% |
|
|
3 years |
2.8% |
£100 |
85% |
|
|
5-25 years |
4% |
£1,000 |
85% |
|
|
2 years |
3.7% |
£400 |
80% |
|
|
5 years |
5.1% |
£0 |
80% |
|
|
2 years |
3.2% |
£0 |
80% |
All figures are rounded up, e.g. 5% means 4.99% and £500 is £499 or £495.
Re-mortgagers
|
Mortgage |
Cheapest over |
Interest rate |
Arrangement fee |
LTV |
|
2 years |
4.18% |
£1,000 |
85% |
|
|
3 years |
5% |
£500 |
85% |
|
|
5 years |
5.8% |
£0 |
85% |
|
|
2 years |
3.8% |
£500 |
85% |
|
|
3 years |
2.8% |
£100 |
85% |
|
|
5-25 years |
4% |
£1,000 |
85% |
|
|
2 years |
2.75% |
£900 |
80% |
|
|
3 years |
4.49% |
£200 |
80% |
|
|
5 years |
5.09% |
£1,000 |
80% |
|
|
2 years and 5-25 years |
3.2% |
£0 |
80% |
|
|
3 years |
2.8% |
£100 |
80% |
|
|
2 years |
4% |
£200 |
70% |
|
|
3 years |
4.3% |
£0 |
70% |
|
|
5 years |
4.6% |
£600 |
70% |
|
|
2-3 years |
2.8% |
£0 |
70% |
|
|
5-25 years |
2.5% |
£600 |
70% |
Home movers
|
Mortgage |
Cheapest over |
Interest rate |
Arrangement fee |
LTV |
|
2 years |
3.7% |
£500 |
80% |
|
|
3 years |
4.5% |
£200 |
80% |
|
|
5 years |
5.09% |
£0 |
80% |
|
|
2 years and 5-25 years |
3.2% |
£0 |
80% |
|
|
3 years |
2.8% |
£100 |
80% |
|
|
2 years |
3.7% |
£500 |
70% |
|
|
3 years |
4.5% |
£200 |
70% |
|
|
5 years |
5.09% |
£0 |
70% |
|
|
2 years and 5-25 years |
3.2% |
£0 |
70% |
|
|
3 years |
2.8% |
£100 |
70% |
Some lenders have been decreasing arrangement fees and increasing other fees, in order to hide costs from comparison websites. I've tried to take those into account in my recommendations above; even though I haven't shown the other fees in the tables, I have excluded deals that would have been too expensive as a result of them.
I've had to make some assumptions for these tables, so it makes sense for you to do a comparison based on your own circumstances or to contact a broker, such as lovemoney.com's mortgage team. You can pick the brains of our fee-free team on email, over the telephone or via instant messenger - just head over to our mortgage centre.
More: compare mortgages | House prices now at 2003 levels | The best mortgages are found off the high street
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