'Lowest ever' rates on two and five-year fixed mortgages launched - check if you can save £1,000s
Platform and NatWest have today launched fixed-rate deals with the lowest ever interest rates seen on a two-year and five-year fix respectively, according to brokers. But while these mortgages won't necessarily be best for everyone, the headline-grabbing rates of 0.95% and 1.17% indicate that competition between lenders is currently fierce. So check now if you can save £1,000s on your mortgage.
Below we explain how the new mortgages work, how they stack up, and why you should use our Mortgage Best Buys tool to check for the cheapest deals and save now.
These new mortgages are only available if you've at least a 40% deposit or equivalent equity in your home - and the fees are expensive
Here are the key details of the two new mortgage deals launched by NatWest and Platform (Platform is a mortgage intermediary that's part of the Co-op Group):
- Rates are fixed at 0.95% for two years with Platform and at 1.17% for five years via NatWest. This means the interest charged cannot increase or fall over the period of the fix, even if rates elsewhere move, including the Bank of England Base Rate. Brokers at both London & Country and Trinity Financial tell us they believe these to be the lowest rates ever for two and five-year fixes.
- Platform's two-year fix is available to those looking to purchase a home (including first-time buyers) and those looking to remortgage. However, NatWest's five-year fix is only for remortgaging.
- You'll need a minimum 40% deposit or 40% equity in your current home for the Platform deal or a minimum 40% equity in your current home for the NatWest offer. This means the amount you can borrow from the bank – know as the loan-to-value (LTV) – cannot be greater than 60% of the property's value.
- Both fixes come with an expensive product fee. Platform's is £1,499 and NatWest's is £1,495.
- It is possible to port both of these mortgage deals. Theoretically, this means you should be able to take the deal with you if you move home in future and keep your level of borrowing the same - although in practice both lenders would need to approve this and they could deny it based on your finances or the property you're look to buy. If you needed to borrow more on your mortgage, this additional borrowing would likely be at different interest rate.
- Both fixes come with early repayments charges. These apply if you overpay your mortgage by more than 10% each year or if you decide to remortgage before the fixed deal has finished. This fee can set you back by up to 5% of your outstanding mortgage balance if you're on the Platform deal, and 4.5% on the NatWest deal.
- You need to apply for both the Platform and NatWest deals via a broker. You can't apply for them directly. For more information on using a broker, see our Cheap Mortgage Finding guide.
Despite the headline rate you may be able to get a cheaper deal elsewhere
Mortgage rates have been at historic lows for the past few years and cheap fixes give you certainty against rates rising in future. See our What Type of Mortgage to Choose guide for further help on this. But it's not just the rate you need to take into account, as any fees and restrictions need to be considered too.
Platform, for example, has launched two more two-year fixes at 60% LTV alongside its 0.95% fix. These have higher rates of 1.05% and 1.55%, but the accompanying fees are lower at £999 and £0 respectively. Likewise, when it comes to five-year fixes at 60% LTV, Platform has also launched slightly pricier 1.26% and 1.62% deals - compared to NatWest's 1.17% - but with fees of £999 and £0 respectively.
Use our Ultimate Mortgage Calculator to work out overall costs, including fees and interest rates.
Check now if you can cut the cost of your mortgage
Even if Platform and NatWest's deals aren't right for you, if you're coming to the end of your mortgage or you're on your lender's standard variable rate (SVR), you should check if you can cut costs now as rates are low across the board. Of course, it's impossible to say if mortgage rates could fall further, but many can save £1,000s switching to a cheaper deal now.
To benchmark the best deal, put your info into our Mortgages Best Buys Comparison tool, which also factors in fees, then compare the top results with the best deals a broker can offer.
For more tips on how to get a good mortgage deal, see our First-Time Buyers guide if you're looking to get onto the property ladder. Alternatively, have a read of our Remortgage guide if you already own your home and you're coming to the end of your mortgage deal or you're on the SVR.