Would you take Newcastle’s 1.90% two-year discounted mortgage rate?
The most competitively priced mortgages at the moment are discounted variable rates typically available through the smaller building societies.
Trinity Financial has access to a host of lenders offering sub-2% standard variable rate mortgages through lenders like Newcastle for Intermediaries, Tipton & Coseley and Furness Building Society.
Newcastle for Intermediaries offers a 1.90% rate, which has a 2.06% discount from the lender's 3.96% standard variable rate, giving a current rate of 1.90% until 31 October 2024. Applicants will need a 20% deposit to qualify, and the maximum loan is £1.5 million.
After the discounted period, the mortgage reverts to the lender's current standard variable rate of 3.96%, and there is a £999 arrangement fee. This product does not have early repayment charges apart from £180 exit administration fees.
Aaron Strutt, product director at Trinity Financial, says: "Fixed rates have gone up from one per cent to three per cent in many cases over the last few months and borrowers want to know which lenders have the cheapest deals.
"If you are looking for a shorter-term mortgage without early repayment charges, or would rather not take a five or ten-year fix, then it may be worth considering a discounted variable mortgage.
"Most borrowers take fixed rates, and longer-term fixes are very popular. Out of the 13 mortgages, one of our brokers has arranged this month, 11 of them were five-year fixes."
Why don't more borrowers take discounted mortgage rates?
While there is a good choice of discounted variable rates, they are mainly available through the smaller banks and building societies.
Unlike Bank of England base rate trackers, mortgage lenders can increase their standard variable rates without moving to the Bank of England base rate. Even though this is unlikely, it is something that happens.
Representative example: A capital and interest mortgage of £500,000 payable over 30 years, initially on a discounted basis until 31 October 2024 at 1.90% (2.06% off the lender's current standard variable rate of 3.96%), currently 3.96% for the remaining 28 years, 1.90% would require 27 monthly repayments of £1,823.19 followed by 335 payments of £2,336.04. The total amount repayable would be £829,353.85 made up of the loan amount, plus interest (£327,127.34) and £999 (product fee), £130 (final repayment charge), £35 (completion fee). The overall cost for comparison is 3.7% APRC representative.
The actual rate available will depend on your circumstances. Please ask for a personalised mortgage illustration. Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage.
Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation