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First ever sub-1% five-year mortgage fix launched by Nationwide – check if you can take advantage of record low rates

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Nationwide has launched a five-year fixed-rate mortgage deal at 0.99% – the first time interest rates on a five-year deal have EVER dropped below 1%. While mortgage interest rates have been continually creeping down over recent months, Nationwide's latest deal is another reminder of the fierce competition between lenders. So there's no better time to check if you could save £1,000s on your mortgage now.

Brokers at London & Country and Trinity Financial, as well as data analysts at Moneyfacts, believe Nationwide's new deal to be the cheapest rate ever seen on a five-year fix.

Below we've a full rundown of how this new mortgage works, but it won't be right for everyone so use our Mortgage Best Buys tool to benchmark Nationwide's deal against other mortgages. And when it comes to choosing a mortgage it’s always best to use a broker as the market can be complex, so see our Cheap Mortgage Finding guide for help finding a broker.

How Nationwide's new mortgage works 

Here are the main features of Nationwide's new deal:

  • It's available to those remortgaging and to home-movers – but not to first-time buyers. So it excludes a sizeable chunk of people. 

  • The fee is £1,499 – much higher than the usual £1,000ish you tend to see. But married with a cheap rate it still might be good for some. 

  • You can only get it if you have a substantial deposit or equity in your home. You need a minimum 40% deposit or 40% equity in your current home. This means the amount you can borrow from the bank – known as the loan to value – cannot be greater than 60% of the property's value.

  • It's only available for big mortgages. You need to borrow at least £275,000 if you're purchasing or at least £300,000 if you're remortgaging. For home movers, £275,000 is equivalent to a 60% mortgage on a £458,000 property, while for remortgaging, £300,000 is equivalent to a 60% mortgage on a £500,000 property.

  • The rate is FIXED for five years at 0.99%. This means it cannot rise or fall over the five years. This'll remain the case even if rates change elsewhere, including the Bank of England base rate, the official borrowing rate. After five years the 0.99% rate will revert to Nationwide's standard variable rate, currently 3.59%.

  • You can make overpayments of up to 10% each year. The total maximum overpayment each year cannot exceed more than 10% of the original mortgage loan balance.

If the Nationwide deal is right for you, you can apply directly through Nationwide or via a broker. 

Rates are ultra-low across the market. So how does Nationwide's new mortgage compare? 

Clearly, many of the conditions above will exclude certain borrowers, but even if those conditions don't cause a problem, the complexity of the mortgage market means there's still plenty of work to do to compare it against other deals, especially when we're also seeing cheapest-ever rates across other product types, such as two-year fixes. 

To help you choose, use our Mortgage Best Buys comparison tool to help you benchmark prices, and read our First-Time Buyer and Remortgage guides for more help – here are some of the basics to help:
 
  1. The cost of a mortgage is a mixture of the fee and the interest rate, so a low rate alone doesn't always win. Using our Mortgage Calculator, we found that if you're remortgaging at £300,000 over 25 years then the Nationwide deal is the cheapest five-year fix based on the total cost. But for home-movers taking out a £250,000 mortgage over 25 years, Nationwide can be beaten on price by a five-year fix from NatWest at a higher 1.08%, but with a lower £1,025 fee. 

  2. What type of deal is best for you? Fixes vs variables, two-year vs five-year fixes and more. Fixes are useful if you need surety of your monthly payments as they won't change during the initial term – though fixes come in different lengths. A five-year fix can make sense if you don't plan to move in that time, but if you do want to move, while in theory you can take this mortgage with you, in practice your request may be denied and it's not always easy to get additional borrowing – it will be based on whatever deals Nationwide has at the time. See fixes vs variables.

  3. You can use a mortgage calculator to benchmark the best deals, but unless you're a real expert, use a mortgage broker to actually do the switch – they can explain ALL your options, and lenders' borrowing criteria. To benchmark the best deal, put your info into our Mortgage Best Buys comparison tool and see our Cheap Mortgage Finding guide for help finding a broker.  

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