Tesco Bank has reduced a number of its mortgage rates, adding fierce competition to the 85% loan-to-value sector.
Among a number of reductions is the 2-year standard fixed rate mortgage at 85% LTV.
At 2.79%, it is now a standout product in the sector, though the £1,495 fee proves inhibitive to those borrowing a relatively small amount.
(See our guide on the effect of mortgage fees.)
However, the true eye-catching deal is the fee-saver – a 3-year fix at 3.29% with a fee of just £195.
Customers looking for a remortgage option can benefit from free valuation and legal fees, which makes this deal all the more attractive.
- Tesco 3-Year Fee-Saver, 85% LTV.
- 3.29%, £195 fee.
- Free valuation / Legal fees for remortgages.
The Tesco fee-saver rivals the Post Office’s 3-year fix, which is also at 3.29% but comes with a £995 fee.
It also nudges ahead of the Hanley Economic Building Society, which has offered a range of startling deals in recent months. The Hanley Economic offers a 2-year fix with no fee at 3.59%.
But the Tesco fee-saver is matched by the Tipton and Coseley Building Society, which offers a 3-year fixed-rate deal at 3.29% with no fee.
Those seeking mortgage deals in the Midlands might consider checking their eligibility with the mutual, which is near unbeatable in this sector for smaller loan values (as shown in the table below).
But the wide-reaching Tesco Bank remains a strong option, and the option of low arrangement fees is a bonus.
The prospect of fixing for a third year is also a welcome one, as speculation mounts that the Bank of England will be forced to raise interest rates sooner rather than later.
85% LTV: How the Deals Compare
Monthly Payment
|
Tesco 2-Year Standard (2.79%) (£1,495) |
Tesco 3-Year Fee-Saver (3.29%) (£195) |
Post Office 3-Year Standard (3.29%) (£995) |
Tipton & Coseley 3-Year Standard (3.29%) (£0) |
|
| £100K | £463 | £489 | £489 | £489 |
| £200K | £927 | £979 | £979 | £979 |
| £300K | £1,390 | £1,468 | £1,468 | £1,468 |
| £400K | £1,853 | £1,958 | £1,958 | £1,958 |
| £500K | £2,317 | £2,447 | £2,447 | £2,447 |
Average Cost per Year Over Deal Period
|
Tesco 2-Year Standard (2.79%) (£1,495) |
Tesco 3-Year Fee-Saver (3.29%) (£195) |
Post Office 3-Year Standard (3.29%) (£995) |
Tipton & Coseley 3-Year Standard (3.29%) (£0) |
|
| £100K | £6,308 | £5,938 | £6.205 | £5,873 |
| £200K | £11,868 | £11,811 | £12,078 | £11,746 |
| £300K | £17,429 | £17,685 | £17,951 | £17,620 |
| £400K | £22,989 | £23,558 | £23,824 | £23,493 |
| £500K | £28,549 | £29,431 | £29,698 | £29,366 |
The tables show how the 3 year mortgages from Tipton and Tesco represent excellent value, especially for mortgages below £250,000. Though the 2 year deal works out well for higher value loans, consumers can opt for security and fix for a further year at relatively little extra cost.
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