Supermarket giant Tesco has just announced that it will be offering a range of mortgages to customers. The news comes as many high street lenders including Barclays, NatWest, HSBC and Santander have cut rates for low-risk lenders in what the press is calling a mortgage bidding war.
Tesco launches its much talked about range of fixed rate and base rate tracker mortgages today (Mon 6th Aug).
The products will be available to those looking to purchase property and existing customers interested in remortgaging.
One broker told The Guardian that the rates “ aren’ t bad, but they aren’ t market leading either.”
So, will Tesco give the aforementioned high street lenders serious competition?
Tesco Bank is Offering the following Fixed Rate Mortgages:
- Two-year fixed rate at 3.19% (no more than 70% LTV) with an £ 800 product fee and a £ 195 booking fee.
- Two-year fixed rate at 3.59% (75% LTV) and the same fees.
- Two-year fixed rate at 3.99% (80% LTV) and the same fees.
- There’ s also the option to scrap the fees and pay higher rates of 3.59%, 3.99% and 4.39% for each product above.
Tesco is also offering three-year fixed rate mortgages from 3.69% and a five-year fixed rate product at 3.89% for those borrowing up to 70%. The £ 800 product fee and the £ 195 booking fee apply to both.
Tesco Bank is Offering the following Base Rate Tracker Mortgages:
- Two-year base rate tracker at 3.19% for those borrowing no more than 70%.
- Two-year base rate tracker at 3.99% for those borrowing 80%.
Whilst Tesco aren’ t offer rates quite as competitive as some of their high street competitors (NatWest recently announced a 2.95% five-year rate, the lowest ever seen in the UK), there are a number of benefits to borrowing from them.
Tesco mortgages are fairly flexible and allow lenders to make regular or large overpayments to the tune of 20% per year during the initial rate period without incurring a penalty. It’ s also possible to take two payment holidays per year. Tracker customers can switch to a fixed rate and if you’ re remortgaging, Tesco is offering free standard legal and valuation services.
Tesco mortgages also allow customers to rack up Clubcard points. Those with Clubcards will earn one point for every £ 4 of their monthly mortgage repayment.
Benny Higgins, Tesco Bank chief executive, said: “ Entering the mortgage market is a significant step in broadening the products we offer to Tesco customers. With a focus on serving Tesco customers for the long term, we will take responsible lending decisions and have developed a mortgage business to meet our customers’ needs now and into the future.”
Sources: Tesco, Guardian online.