While it may be presumptuous to say that the industry has been holding their breath waiting to see what Tesco Bank were going to release in the way of their new mortgages, it’s safe to say that many lenders have been watching closely. Now they have finally arrived on the market, the obvious question is where they worth waiting for?
They are offering fixed rate deals over 2, 3 and 5 years, as well as a 2 year base tracker, and have 3 different levels of loan to value; 70%, 75% and 80%. This effectively means that in order to be able to access any of the Tesco mortgages you will have to have equity or savings of at least 20%. This is interesting in the fact that they have instantly excluded many first time buyers who simply cannot raise such a large deposit for their first home.
There is a fee of £995 for the best Tesco rates, which is pretty standard throughout the industry. Once the fixed rate deals have finish, the interest rate will then revert back to 4.24%, which is Tesco Bank’s standard variable rate. This is lower than the average SVR across the board, but when compared to the top 5 lenders it is on a par or slightly higher.
An important point to note is the face that these mortgages can only be accessed directly from the lender online and are on a non advisable basis. Whilst this will appeal to some borrowers, it certainly won’t suit everyone, especially those who aren’t confident about their knowledge of mortgages, and will need a helping hand to go through the process.
There are a few added perks to getting your mortgage from Tesco, not least of which is the Clubcard points you will amass. As you repay your loan, you will collect 1 point for every £4 of your monthly repayment, and whilst this is a decent bonus for Tesco shoppers, cheaper products would give you real cash in your pocket to spend where you want.