Mortgages Uncovered

First time homebuyers and anyone needing to consider re-mortgaging who have saved a decent deposit got a very welcome boost as a sudden price cutting war seemed to break out amongst lenders last week. The first time buyers will no doubt still struggle to get near to the best rates however, if you have some capital, there are some pretty good incentives on the market to act now.

Cheltenham & Gloucester (C&G), which is the lending arm of Lloyds TSB, opened the hostilities on last week by launching a whole range of mortgages with a very complicated array of rates and fees. It seemed though that anyone with a 40% deposit to put down on their property who could also afford the fee of £2,094 can now get a 2 year fixed rate from C&G at 5.65%. This is already substantially lower than even the best rates that were on the market 2 months ago and also one of the best deals which is on offer for those people with enough money to qualify for it. The lender will also cut the initial fee to £1,094 to anyone opting for a 5.75% rate.

All the larger name lenders such as Abbey, Halifax, C&G Nationwide and Woolwich are the ones now fuelling the sudden rate-cut war, but many of the smaller lenders are also following suit. Yorkshire building society also raised the ante last week by re-launching its range of 2 year fixed mortgages that look appealing to anyone with a 25% deposit or a 25% equity in their home. It’s rate now stands at 5.54% with a £895 fee. Additionally, it offers a 4.89% 2 year fixed rate for anyone who is able to pay a fee of 2.5% of their loan.

Both Direct Line and Royal Bank of Scotland are amongst the few lenders who will still lend up to 95% of the value of a property, however, the rates start at an eye watering 6.89% on a 2 year fixed rate. Both the lenders also charge a much higher lending fee on top of their other fees.

Householders should double check their lenders’ policies on mortgage fees. Many lenders now charge part of the total mortgage application fee up front. This is not likely to get refunded to you if you spot a better deal during the original application process, even if the deal you see is with your same lender. Some lenders will also still ask for the rest of the mortgage application fee, which could be anything up to £2,000, to be paid even if the application process falls through.