|
This week has seen the launch of some particularly good fixed-rate mortgage deals, which are likely to appeal to homebuyers on tight budgets and those who are keen to insulate themselves against possible interest rate shocks.
There are loans on offer allowing you to fix your monthly payments for two years at a rate as low as 5.14%, although, if you are prepared to sign up for a fix lasting just one year, you can get even better than that.
Nationwide, which has come under fire from some mortgage brokers over its less-than-impressive new deals, came out fighting this week with a loan fixed at 4.95% for one year.
It is available to all borrowers - homebuyers and remortgagers - but has a maximum loan-to-value of 75%. This will probably put it out of the reach of many first-time buyers, but should not pose a problem for remortgagers. The £95 reservation fee and valuation costs are both refunded on completion and, for those remortgaging, there are no legal fees to pay either. If you can only stump up a deposit of 5%-10% the rate is 5.15%, while if you can manage 10%-25% it's 5.05%.
Looking at two-year fixed rate deals, Newcastle building society has one of the best: a rate of 5.15% fixed until October 2003. It is available to homebuyers and remortgagers who can stump up a minimum of 10% of the value of the home. You have to pay a £295 fee, but what makes this one so special is that there are no early redemption penalties at any time. So, if you take it and then find that rates continue to drop, you are free to bail out, says David Hollingworth, at Bath-based mortgage broker London & Country.
Some of these deals may prove appealing to the fairly sizeable batch of people coming to the end of two-year, fixed-rate deals they took out in the summer of 1999. Interestingly, while the Bank of England base rate is the same now as it was then - 5% - the fixed rate deals on offer are much more keenly priced, illustrating how the mortgage price war is cutting prices.
An £80,000 interest-only borrower who signed up for a typical deal, fixed at 5.99% two years ago, that is ending now will have been paying £399.33 a month. If he or she took the 5.15% Newcastle deal, they would pay £343.33 a month - £56 less.
Two other top-notch, two-year fixed rates are from Yorkshire building society (5.19%, available to purchasers and remortgagers, redemption penalties within the two years only, £220 fee, maximum loan-to-value 75%) and Britannia building society (5.14%, other details the same as the Yorkshire deal, except the fee is £295).
London & Country also likes Coventry building society's loan fixed at 5.50% until January 2004. There is a £295 completion fee but no penalties at any time, you get a free valuation, remortgagers also have their basic legal costs covered, and you only need to be able to stump up a deposit of 5%-plus.
Savills Private Finance, another mortgage broker, also highlights the Yorkshire and Britannia two-year fixed rate deals. It reckons the best three-year fix is offered by Portman building society: 5.39% fixed until October 2004. It's available to purchasers and remortgagers, minimum deposit is 5%, and there is a £300 fee to pay and redemption penalties within the three-year period.
Experts are divided as to whether there are any more interest rate cuts on the way. If you think rates are likely to fall further, you may want to opt for a discounted rate mortgage. A cracking discount deal was launched this week by Darlington building society. It is offering a 2.25% discount off its standard variable rate until November 2003, giving a current pay rate of just 4.34%. It's available to those with a deposit of 10%-plus, there is no arrangement fee and no redemption penalties at any time, and it will give you £100 back towards your legal costs. Maximum loan is £250,000. The deal is available to those living outside the society's patch.
With fresh reports of booming house prices, Abbey National this week warned first-time buyers not to delay getting on to the property ladder in the belief that house prices might come down. "Buyers who delay a decision now could find their affordability worsens if prices continue to rise."
|