THE cheapest two-year fixed-rate mortgages in more than a year were launched last week, heading straight to the top of the 'best-buy' tables. But borrowers should not be dazzled by the headline rates and assess all-round value when picking a new loan.
WATCH OUT: High upfront and valuation fees can make low-rate deals less competitive for small mortgages
High upfront and valuation fees can make them less competitive for smaller mortgages.
Portman and Lambeth building societies have launched the deals, both set at 4.15%. They are for borrowers who have a 20% deposit, but Portman's loan charges a £499 set-up fee, while Lambeth's is £440.
Neither deal offers help towards legal or valuation costs for those remortgaging, which can be in excess of £500.
Ian Giles at broker Purely Mortgages in central London says: 'Borrowers-with average-sized mortgages of about £120,000 would save £200 over two years with a 4.28% fix with Alliance & Leicester or Halifax's 4.29% two-year fix, available through brokers. This is because both offer free legal and valuation deals.'
Giles says larger providers, such as Halifax, should be able to process a remortgage much more quickly than Portman or Lambeth, meaning customers avoid having to pay expensive standard variable rates while waiting for the remortgage to go through.
However, A&L has a £295 exit fee if customers remortgage to another lender after two years. The average fee is between £100 and £200.
