Mortgages: cut out the middle man for the best rates

But the offer from Co-op/Britannia of a lifetime tracker at 2.49% (BBR plus 1.99%) available only to those that already hold a current account, looks too good to miss.  Loans up to 75% are on offer with no fee. To qualify the current account must have been held for at least two months, with your salary paid directly into it.

It may be worth moving your current account to First Direct too which has some of the most competitive mortgages on the market and is rated by its customers as being consistently good in the Which? report.  Overall, it scored 82% in Which?'s customer satisfaction survey compared with an average of 59%, while Santander scored 47%.

Rejected!

And be aware that some of the loans offered direct have a very high rejection rate.  New kid on the block, Aldermore, complains that some of the high street banks are using credit scoring as a ‘blunt tool’ to turn away a high proportion of potential homebuyers.  It claims creditworthy borrowers are regularly rejected because tick box underwriting rejects those with little or no credit history, recent job movers, borrowers with several jobs or those who are self-employed. 

But not all ‘riskier’ borrowers are being turned down.  Research from Yorkshire Building Society, which makes a point of giving special consideration to first time buyers, shows that since refreshing its range of First Time Buyer mortgage products in June, there’s been a surge in demand. The number of people with smaller deposits helped onto the property ladder has doubled month on month.

Yorkshire has again reduced the rate on its two-year fixed rate First Time Buyer mortgage which is top of the best buy charts at 5.59%. The minimum deposit is 10% and there is help with upfront costs in the form of a free standard valuation service, free legal service and £500 cash back.   

It is possible to get cheaper deals but you will need a larger deposit.  The best offer for those with a 15% deposit comes from Saffron Building Society which has an 85% loan to value discounted to 3.69% for the first two years.  There is a fee of £595 and after the two years are up the rate reverts to a much less attractive 5.9%.