Best deals for home movers

When moving house, you’ll hopefully have a decent equity stake in the property you’re selling so you’ll be in a strong position to secure a cheaper mortgage.

We’ve looked at the bank and building society market to find some of the best deals when buying your next home.

We’ll be considering a £300,000 property purchase, borrowing at 60% loan-to-value as the buyer has £120,000 from the sale of their previous home. They’ve chosen a 25-year mortgage term. 

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Two-year fixes

It’s crucial to consider the overall cost of a mortgage, and not just focus on the headline rate. There are dozens of ultra-low fee deals, though in many cases buyers will end up paying more because of hefty product fees.

Norwich and Peterborough Building Society, up to 65% LTV, 1.44%
Fixed for two years then reverts to SVR (currently 4.74%)

This mortgage will cost £715 per month for the first two years, representing an annual cost of £8,850. The standard variable rate (SVR) is 4.74%, so repayments will jump after two years. Fees of £676 also apply.

Tesco Bank, up to 60% LTV, 1.58%
Fixed until 30 April 2019 then reverts to SVR (currently 4.24%)

For a fee-free option, consider the Tesco Bank’s fixed rate deal. This offers a rate of 1.58%, meaning monthly payments equal £727 and the annual cost is £8,883. The product is fixed until 30 April 2019 and the rate reverts to the SVR at this point, currently 4.24%.

Fix for longer

It’s possible to lock in a mortgage rate until 2027, which can ensure you know exactly what your repayments will be. These long-term deals are cheaper than ever before, but the security of knowing what you’ll pay for a decade doesn’t come cheap – rates are much higher than with two-year deals.

Virgin Money, up to 65% LTV, 1.89%
Fixed until 1 April 2022 then reverts to SVR (currently 4.54%)

In the five-year fix market, Virgin Money leads the way. It is currently offering a rate of 1.89%, fixed until 1 April 2022. Fees are £970 which results in an average monthly cost of £753. Virgin's SVR is currently 4.54%, meaning payments will leap when the fixed period expires.

TSB, up to 60% LTV, 2.49%
Fixed until 28 February 2027 then reverts to SVR (currently 3.74%)

The cheapest ten-year fixed rate is available from TSB at 2.49%, although there is a product fee of £1,445. That’ll cost £807 per month, or £19,638 over two years. When the fixed-rate period ends in February 2027 monthly repayments will increase, assuming rates don’t change and our buyer hasn’t switched to a better deal.

Variable rates

If you think the Bank of England’s base rate is likely to stay the same or fall then a variable rate could be for you. However, be aware that rates could rise at any time and leave you out of pocket.

Coventry Building Society, up to 75% LTV, 1.49%
Variable for term

Coventry Building Society currently has the cheapest variable rate at 1.49%. Monthly repayments are £719 with initial fees of £999 – this represents an annual cost of £8,678.

Interest-only deals

If you’re looking for interest-only options, remember the rules are now a lot stricter and you’ll need to show a well-thought out plan for repaying the capital at the end of the mortgage. Monthly repayments are much lower than with capital repayment, but you'll pay more interest on an interest-only mortgage in the long run.  

Not every provider will lend on an interest only basis, so if you’re looking for one it’s best to speak to a mortgage broker.

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