You are here: Home - Mortgages - Remortgage - News -

‘Head-turning’ sub 1% mortgage deal launches: how does it stack up?

Written by:
Leeds Building Society has launched a new range of two-year discount mortgages, starting from 0.99%. But how good is the sub 1% deal?

The mortgages are an extension of the lender’s existing discounted rate deals and offer a combination of incentives.

The range now includes a 0.99% two-year discount mortgage available up to 65% of the property’s value with a £1,999 fee. Borrowers looking for a fee-free option can choose a 1.47% two-year discount mortgage up to 65% loan-to-value with no fee.

For those with a more modest deposit there is a 1.79% two-year discount mortgage up to 85% of the property’s value with no fee.

After the end of the two-year term each has a 1% discount for a further three years.

Sub 1% mortgage deal: how does it stack up?

Any sub 1% mortgage deal is bound to get some attention from borrowers hoping to lock into a low interest rate on their loan, according to Rachel Springall, finance expert at independent data site Moneyfacts.

She said: “The Leeds BS discounted variable deal is likely to turn heads because not only will it provide borrowers with a free valuation, but it will also assist towards remortgage legal costs.

“One thing to keep in mind is the upfront fee which is £1,999, so the overall true cost must be considered, particularly as the low rate is only charged for the first two years. The rate reverts to 4.69% variable for three years thereafter.”

Springall added that fixed rate mortgages are still competitively priced and even if there aren’t other sub 1% mortgage deals, some lenders offer enough incentives to remortgage without having to pay an upfront fee.

As an alternative, Yorkshire Building Society has a deal priced at 1.71% for remortgage customers at 60% loan-to-value, with no product fee and offers a free valuation and free legal fees, which Springall said is a “fantastic bundle”.

But she said it may be cheaper for borrowers to find a lower rate deal with a smaller product fee.

“This is why borrowers will need to compare deals very carefully before they commit. There are lots of low fixed rate deals that carry high fees, so it’s worth watching out for these too.”

As an example, the Yorkshire BS deal would be £393 cheaper over two years because of the product fee the Leeds 0.99% deal charges. However, the 1.47% Leeds deal would be £544.80 cheaper than the Yorkshire deal (based on a £200,000 loan over 25 years).

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape for summer, and moving your cash savings to a higher paying deal is ...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
interest rates
Base rate held at 0.75% amid business and Brexit uncertainty

The Bank of England has maintained the base rate at 0.75% for the third month in a row.