There’s never been a better time to get a mortgage or move house where interest rates are concerned. Here’s what you need to know…

If you’re thinking of getting on the property ladder or moving from your existing property, now is a good time to take out a new mortgage as rates are incredibly competitive. Earlier this week Halifax launched a new 0.83 per cent two-year fixed-rate deal.

This interest rate is available for those borrowing up to 60 per cent of the value of a property and is for first-time buyers and those moving house. This means you’ll need to have a substantial deposit of 40 per cent of the property price. You’ll also need to borrow a minimum amount of £250,000.

The new Halifax deal comes with a fee of £1499 if you apply through a broker. It is not available to those seeking to remortgage. You must be about to buy for the first time or be an existing homeowner wanting to move house. It enables you to make overpayments of up to ten per cent each year.

Falling rates

This exceptional rate sees a continued trend for competitive borrowing. In May, it was reported that interest rates fell below one per cent for the first time in almost four years. At the time, experts were rightly predicting that rates would continue to fall.

Although the new Halifax deal is only for those moving house, there are also some competitive borrowing options for those seeking to remortgage. In May, TSB launched a new remortgaging deal of 0.99 per cent and some two-year fixed rates are as low as 0.95 per cent.

Larger deposit

If you don’t have a 40 per cent deposit, you may be wondering where you stand when it comes to competitive interest rates. Generally speaking, the larger your deposit, the lower the interest rate. However, there are still some attractive rates for those with smaller deposits.

So why are interest rates so low at the moment? Industry experts believe that lenders are keen to attract borrowers whom they perceive to be low risk back onto their books. Many lenders had to tighten their lending criteria during the worst of the pandemic. There has also been a need to cater for more first-time buyers as the government introduced the 95 Per Cent Mortgage Guarantee Scheme in April.

Vast competition

In short, competition among lenders is rife, with even five-year fixed-term mortgages dropping below one per cent for the very first time in July.

However, while there are some appealing mortgage loans on offer, it’s important to remember that the interest rate isn’t the only key factor. Some lenders will charge an arrangement fee of up to £2000. You might also be charged a booking fee of between £99 to £250. In some cases, a slightly higher interest rate with no fees might actually make more financial sense. Always speak to a reputable mortgage broker to make sure you’re getting the right mortgage loan for you. 

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