Will you add a Tesco Mortgage to your shopping list?
Tesco Bank are launching their first mortgages today which include a selection of base rate tracker and fixed rate mortgages available for those who are remortgaging and those who are purchasing a property.
Tesco are not offering low fixed rates like their rivals revealed last week but will be hoping that their vast customer base and marketing will put them in a strong position in the mortgage market. NatWest launched a five year fixed rate mortgage at 2.95% which puts them in front of Santander and HSBC which have released a 5 year loan at 2.99%. In contrast, Tesco’s cheapest five year fixed rate is 3.98% however, Tesco’s fees are a lot lower and their competitors which are only offering their low rates to those who are borrowing a maximum of 60% of the properties value.
You can earn Tesco clubcard points at 1 point per £4 on your monthly mortgage repayments unfortunately, Tesco mortgages are not aimed at helping first time buyers as all Tesco mortgages require a deposit of at least 20%. An advantage to Tesco's mortgages is they offer a fair bit of flexibility meaning you can make regular lump sum overpayments of up to 20% of the outstanding balance each year during the initial rate period and you wont have to pay a penalty. You can also apply for two payment holidays which will allow you to miss one month's payment per year. For those who choose a tracker mortgage they will have the opportunity to switch to a fixed rate mortgage and those who are remortgaging will benefit from standard legal and valuation services for free.
Tesco’s decision to launch their mortgages when many people are on holiday or infatuated by the Olympics has left some critics confused. What are your thoughts on Tesco's new adventure into the mortgage sector? Do you think they should have considered a mortgage for first time buyers as that could have helped to lift the housing market out of its decline? If you're looking for a mortgage, would you consider a Tesco Bank mortgage?
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