The fact that we are now officially out of recession in the UK would tend to suggest that things are starting to get a bit brighter economically.
Obviously that is good news, but from a mortgage perspective it starts to make it a bit tricky to decide how long you want to take out a deal for.
The lowest rates are on the shortest deals, generally around two years, with the rate increasing as the length of deal increases.
Don’t get me wrong, even some of the longer-term deals of up to five years can still come in with a rate of less than 5%, so that is still pretty competitive in historical terms.
Some of the better rates available over two, three and five years include:
A low, short-term tracker rate: if keeping your costs down is what matters most, then you will have to opt for a short-term rate. Accord has a very low tracker rate of only 2.39% to start with.
This is a tracker rate of Bank of England base rate plus 1.89% until the end of February 2012 followed by the standard variable rate, currently 5.99%.
The penalties last for the same time as the tracker rate and are 4% of the loan amount plus £90.
There is an arrangement fee of £1,900 and a booking fee of £95. The maximum amount you can borrow is 65% of the value of the property and the maximum loan is £750,000.
A medium-term tracker rate: another lender offering competitive tracker products at the moment is Santander (formerly Abbey).
It has a three-year tracker rate with a starting rate of 2.69%, which is Bank of England base rate plus 2.19% for 36 months. The penalties last for three years and are 2% plus £225. Once again there is a booking fee, which is £995, but there is no arrangement fee and a free valuation is provided. The maximum amount you can borrow is 70% of the value of the property and the maximum loan is £500,000.
A longer-term fixed rate: if you like the idea of a deal with a fixed rate so that you know what your payments are going to be then HSBC Bank has a fixed rate until the end of March 2015, with a competitive rate of 4.73%.
There is no arrangement fee, but the booking fee is £999 and this cannot be added to the loan. The penalties last for the same time as the fixed rate, but are pretty reasonable at just 1%.
The maximum amount you can borrow is lower at 60% of the value of the property and the maximum loan is £500,000.
Tim Twiddy is a chartered financial planner with Atlantic Investors. For more information, call 0800 163 659