Trying to work through the maze of mortgage products on the market to find the right one for you? Find out which providers were judged to be the best in the business – whether you’re taking your first tentative steps on the property ladder, looking to switch mortgages, or you’re a last-time buyer
Moving home should be exciting. Whether you are taking your first step on the property ladder or buying your forever home, it’s an important milestone that often marks the start of a new life.
However, the reality is it can be one of life’s most stressful events. Moneywise can’t pester solicitors on your behalf or deal with any difficult buyers or sellers in your chain, but we can help you make one vital decision, and that’s picking the right mortgage.
The right lender, offering the right deal and top-notch customer service, can help remove a good chunk of your home-buying nerves and alleviate some of your financial concerns.
Yet the choice of lenders and deals can often be dumbfounding, and working out which provider to approach is often difficult. For many borrowers – such as first-time and older buyers – it’s also not as straightforward as shopping around for the cheapest rate.
This is where the Moneywise Mortgage Awards 2018 can help. Our awards will help you to narrow down the best lenders for you. Whether your needs are straightforward or a little more complicated, we can help you find the best deals.
It’s not just for home buyers either, with a category for those looking to remortgage their existing property too. There’s also a category for buy-to-let borrowers that will help pinpoint the lenders that really understand the very specific needs of buyers in this market.
Best lender for fixed rates
Winner: HSBC
- Contact: Hsbc.co.uk/1/2/mortgages
- Top deal: 1.49% two-year fix
- Max LTV: 60%
- Fee: £999
Highly commended: Barclays
Fixed-rate mortgages offer borrowers the certainty that their mortgage repayments will not rise if interest rates do. With interest rates remaining so low and experts predicting base rate rises this year (see page 9), it comes as no surprise that fixed deals are the preferred choice of most buyers.
Deals are typically fixed for two to five years, but longer-term fixes of as much as 10 years are available.
This is a hugely competitive part of the mortgage market and this was reflected in the close scoring within this category. For the second year in a row, however, the prize was scooped by HSBC.
Judge Aaron Strutt, product and communications manager at mortgage broker Trinity Financial, is a big fan.
“HSBC has consistently offered great fixed rates with competitively priced arrangement fees. The bank has been targeting borrowers with different deposit sizes and eased its acceptance criteria to ensure more applicants qualify. He adds: “The lender always has one eye on the best buy tables when it launches a new fixed rate and this helps drive down prices across the market. HSBC has also recently introduced a new processing system and employed more staff to manage demand.”
Coming a very close second place is Barclays.
Judge Andrew Montlake, director at mortgage broker Coreco, says: “Barclays has been so consistent this year, with excellent pricing and some really helpful criteria.”
Best lender for discount mortgages
Winner: Yorkshire Building Society
- Contact: Ybs.co.uk
- Top deal: 0.97% discounted variable rate until 30 June 2020 (4.02% off SVR of 4.99%)*
- Max LTV: 65%
- Fee: £1,495
- Small print: 1% early repayment charges.
Highly commended: Hinckley and Rugby Building Society
These mortgages offer a rate that is discounted against the lender’s standard variable rate. They don’t offer the security of a fixed-rate mortgage, but for those borrowers who are happy to accept the risk associated with variable-rate mortgages, there are excellent deals available.
The winner this year is Yorkshire Building Society, which takes this accolade for the second consecutive year.
Mr Strutt says: “Yorkshire Building Society has consistently offered market-leading discounted rates that undercut the price of fixed rates. The lender provides such a huge discount off its standard variable rate (SVR), the deals are tempting borrowers who want the lowest monthly repayments rather than longer-term payment security.”
In a category dominated by building societies, the highly commended award goes to Hinckley and Rugby Building Society.
Judge David Hollingworth, associate director of communications at broker London & Country Mortgages, says: “Hinckley and Rugby is a lender that is consistently leading the way on discounted products with an impressive range of both short and long-term, offset and early-repayment charge-free options. That spans across all loan to values (LTVs) including 90% and 95% LTV, where they were one of only a few lenders offering a credible alternative to fixes.”
Best lender for offset mortgages
Winner: Scottish Widows Bank
- Contact: Scottishwidows.co.uk/mortgages
- Top deal: 1.64% two-year fix (purchase-only rate)
- Max LTV: 60%
- Fee: £1,499
- Small print: There are early repayment charges of 1.9% of the chargeable balance until the 12th payment, followed by 0.9% for the remaining term of the fixed rate.
Highly commended: Accord
Offset mortgages can be a great boon to borrowers who also have a healthy savings balance. By linking their savings to their mortgage, borrowers are able to reduce the mortgage balance on which interest is charged. So, for example, if you borrowed £100,000 but had £25,000 in savings, you would only have to pay interest on £75,000 of your mortgage. Over the whole term of a mortgage, this can save borrowers thousands of pounds in interest – either by reducing monthly repayments or paying off the loan early.
For the fourth year on the bounce, the award goes to Scottish Widows Bank, which got the maximum number of votes. Mr Montlake has the ultimate compliment for the lender. “It’s one of my most used lenders this year, excellent offering and pricing – so good I remortgaged there myself!”
Offset features are available on all its mortgages, which include flexible mortgages and professional mortgages, for people with careers including solicitors, doctors, teachers, actuaries and engineers. Each application is assessed individually, without adherence to rigid rules.
Mr Hollingworth adds that the range has also become more affordable. “Scottish Widows has long offered offset functionality, but last year backed that up with very competitive pricing. Making products attractive in their own right but adding offset on top helps open up the benefits of offset up to a wider audience.”
Accord Mortgages – a broker-only subsidiary of Yorkshire Building Society – is runner-up in this category.
Mr Strutt says: “Accord offers a range of well-priced offset deals with low arrangement fees and it typically offers two and five-year fixes. The society has a huge appetite to lend and wants to take business from many of the other mortgage providers. By providing a great range of offset mortgages, the lender has another niche to tempt in borrowers.”
Best lender for buy to let
Winner: Barclays
- Contact: Barclays.co.uk/mortgages
- Top deal: 1.55% two-year fix
- Max LTV: 60%
- Fee: £1,950
- Small print: 3% early repayment charges
Highly commended: Santander
It’s becoming increasingly difficult for landlords to make money from renting property, with increases to stamp duty and changes to tax relief on mortgage interest. This means it’s all the more important for investors to get the best deal they can on their mortgage from a lender that can help them navigate this changing market.
This year, the judges voted unanimously for Barclays.
Mr Strutt says: “There is a lot of competition in the buy-to-let market and lenders need to work very hard to attract new customers. As well as offering super-cheap rates, Barclays takes personal income into account, as well as the rental income, to ensure more borrowers secure the loan size they need.”
Santander came in second place.
Mr Strutt says: “Santander offers low buy-to-let rates and attractive buy-to-let rental calculations to make it easier for landlords to secure new rates. The remortgage calculation helps landlords to switch on to some very competitively priced rates. The bank also provides a free property valuation if you are purchasing a property and it has a maximum loan size of £750,000.”
Best lender for first-time buyers
Winner: Nationwide
- Contact: Nationwide.co.uk/products/mortgages
- Top deal: 1.89% two-year fix
- Max LTV: 90%
- Fee: £999
- Small print: 2% early repayment charges in year one, then 1% in year two
Highly commended: Halifax
Life is tough for first-time buyers, who are having to raise bigger and bigger deposits in a climate where lending criteria are only getting tighter. This award is, therefore, here to recognise those lenders that are going the extra mile to help their customers take that elusive first step on to the property ladder.
This year it was a two-horse race, with Nationwide only just pipping Halifax to the post.
Commenting on our winner, Mr Hollingworth says: “Nationwide presents itself as a lender eager to help the first-time buyer market, and its good rates, backed up with well-judged incentives across the range of free valuations, and £500 cashback, mean that it delivers for first-time buyers time after time.”
Mr Montlake, meanwhile, is a big fan of our runner-up for this market: “No lender knows first-time buyers like Halifax. It is consistently excellent,” he notes.
Best lender for first-time buyers with support
Winner: The Family Building Society
- Contact: Familybuildingsociety.co.uk/mortgages
- Top deal: 2.89% three-year fix
- Max LTV: 95%
- Fee: £599
Highly commended: Barclays
The challenge for first-time buyers is so great that many will call on parents or other family members for financial support. For this reason, Moneywise introduced this award last year to recognise those lenders that have come up with innovative loans that can accommodate financial support provided by a third party.
Taking the award this year is last year’s runner-up, the Family Building Society.
Mr Strutt explains the lender’s innovative proposition. “The Family Building Society has a range of options for younger borrowers who are relying on the bank of mum and dad to get on the property ladder. This includes guarantor mortgages, where parents can use their income to boost the application, also joint borrower sole owner options where the parents’ names go on the mortgage and not the deeds.”
He adds: “The Family Building Society provides a 95% LTV mortgage so long as borrowers can put down a 5% deposit. As part of the deal, parents agree to put savings in a linked savings account or have a charge secured on their property. The three and five-year fixed rates are competitively priced, and if money is in a linked saving account it’s used to reduce the monthly repayments and the parents are even paid interest.”
Last year’s winner, Barclays, is this year’s runner-up.
Mr Hollingworth says: “Although Barclays’ Family Springboard was not the first product to use the approach of additional security from parents, it is certainly one of the best. Requiring the parent to lock down only 10% for what will often be as little as three years is practical and rates are available to as much as 100% of the purchase price.”
Best lender for lifetime trackers
Winner: First Direct
- Contact: Mortgages.firstdirect.com
- Top deal: 2.49% lifetime tracker (base rate plus 1.99%)*
- Max LTV: 75%
- Fee: £0
- Small print: No early repayment charges
Highly commended: Santander
Not every borrower wants to remortgage every few years and lifetime trackers provide a solution for those seeking long-term value. Rates are linked directly to the Bank of England base rate, so lenders cannot change them on a whim. Also, many deals have no early redemption penalties, so borrowers aren’t tied in either.
This year, the award goes to First Direct.
Mr Hollingworth says: “Any winner should be able to point to consistency through the year, rather than an occasional victory. First Direct can certainly claim that, and has always been at the top or thereabouts when it comes to the best lifetime tracker deals on the market.”
Mr Montlake agrees, and says it’s the product First Direct “excels at”.
Coming in second place is Santander.
Mr Hollingworth adds: “Although it may not have offered the most extensive range of lifetime tracker options, Santander maintained a competitive option throughout the year, backed by what has been extremely strong service.”
Best lender for remortgages
Winner: Barclays
- Contact: Barclays.co.uk/mortgages
- Top deal: 1.49% two-year fix
- Max LTV: 60%
- Fee: £999
- Small print: 3% early repayment charges
Highly commended: HSBC
When your fixed or discounted mortgage deal runs out, you’ll be moved on to your lender’s higher standard variable rate. This can see your repayments soar, but you can avoid that by remortgaging on to a more competitive deal. Although there will be upfront fees attached to remortgaging, these should be offset by lower monthly repayments. Many lenders will also offer incentives such as cashback or free legal work to encourage switching, too.
Our winner this year is Barclays.
Mr Hollingworth says: “Barclays has shown strong determination to be a strong player in what has been a very competitive remortgage market. As well as offering good rates with a remortgage package as standard, it also has the Great Escape option with no fees and cashback as well, removing some of the costs that hinder switching.”
Taking the runner-up prize is HSBC.
Mr Hollingworth adds: “HSBC gets a deserved place by offering what have very often been market-leading rates.
If it had a weak spot, it was the fact that it didn’t always offer remortgage incentives, but it deserves credit for recognising this and making them a standard part of its offering to boost its remortgage credentials further.”
Best lender for larger loans
Winner: Barclays
- Contact: Barclays.co.uk/mortgages
- Top deal: 1.56% two-year fix for mortgages between £1 million and £5 million
- Max LTV: 60%
- Fee: £2,499
- Small print: 3% early repayment charges
Highly commended: HSBC
Despite their wealth, many borrowers requiring larger loans can find their choices limited. This is because the amounts required may exceed the maximum loan size on the most competitive deals. The fact that these borrowers may also have income from a variety of sources only complicates matters.
For this reason, Moneywise introduced this new category last year to highlight those lenders that are serving this market well, and this year the award is retained by last year’s winner, Barclays.
Mr Montlake is not short of praise for the lender. “Barclays is outstanding in every way: affordability, pricing, interest-only, and even looking at bespoke pricing for the right clients. Exceptional!”
HSBC came in a close second.
Mr Hollingworth says: “HSBC has frequently offered the keenest rates on the market and it doesn’t put ceilings on those rates, making them available to very large loan borrowers as well.”
Best lender for new-builds
Winner: Halifax
- Contact: Halifax.co.uk/mortgages
- Top deal: 2.15% two-year fix
- Max LTV: 75%
- Fee: £999
- Small print: Early repayment fee 2% to 30 June 2019, 1.1% to 30 June 2020
Highly commended: Santander
Buyers of new homes often need an understanding lender – the property may not have been completed at the time of application, while slick service is often required if a developer has imposed tight deadlines.
Another new category last year, this award recognises those lenders that are up to the job. Proving its commitment to this market, Halifax keeps the award it won last year.
Mr Strutt says: “Halifax has a bespoke range of products available for borrowers looking for new-build mortgages, and a specialist team to manage applications. The bank offers shared equity and shared ownership applications and government housing schemes. There is the option to extend mortgage offers if the new-build completion time overruns.”
Mr Hollingworth adds: “Halifax is a lender that knows the new-build market well, which is apparent in not only the product design but also in the consistently excellent service. It has a range of new-build deals with longer completion deadlines and can offer semi-exclusive rates that can be more generous in the LTV it offers.”
Commenting on Santander, which takes the runner-up position this year, Mr Hollingworth says: “New build has been a competitive market and Santander has been a lender that has worked hard to develop its position in that market. Its excellent processing times are a boost to new-build customers, where timescale is important, and its two-and-a-half-year fixed rates, with longer completion deadlines as well as end date, help it fit the new-build need.”
Best lender for older borrowers
Winner: The Family Building Society
- Contact: Familybuildingsociety.co.uk/mortgages
- Top deal: 2.49% two-year fixed rate
- Max LTV: 80%
- Fee: £999
- Small print: 2% early repayment fee in first year, 1% in second year
Highly commended: Market Harborough Building Society
Older borrowers can often have a hard time getting a mortgage, with many lenders imposing maximum age caps for loans and using rigid lending criteria. This can be particularly problematic for borrowers with interest-only mortgages or those that haven’t been able to fully repay their mortgage before they retire.
This award, which was only introduced last year, recognises those lenders with a more pragmatic approach to older borrowers. Our winner this year is the Family Building Society.
Mr Strutt says: “The Family Building Society helps a lot of older borrowers and has acceptance criteria designed to make it easier to qualify if you have pension or investment income. The lender also takes earned income into account up to the age of 70 and has a common-sense approach to mortgages to get applicants agreed.”
The second place goes to Market Harborough Building Society.
Mr Strutt adds: “Market Harborough will take a client’s overall situation into account and look at their income situation. Unlike many other lenders, each case is agreed by the credit committee, giving more flexibility to get more older applicants through who can clearly demonstrate affordability.”
Innovator of the year
Winner: Kent Reliance
For improvements to its BTL proposition
Lenders are continually developing their mortgage proposition to give themselves the edge over the competition. However, it can sometimes be difficult to differentiate between cheap gimmicks and innovations that make a genuine difference to their customers and address their needs. This category seeks to reward those lenders that are doing the latter.
The award goes to Kent Reliance Building Society for improvements it made to the application process for buy-to-let loans. Mr Hollingworth says: “The buy-to-let market has undergone a huge amount of change in a short space of time. That includes the latest changes for buy-to-let portfolio landlords, who now have to provide detail of their entire portfolio, not just the property in question.
“One of Kent’s innovations has been to promote the use of a technology solution, allowing landlords to upload information from their own data record to automatically sort the relevant data into the relevant fields wherever possible. In addition, the portfolio information is then stored, so that they don’t need to add all the information every time.”
The Judges
The Moneywise Mortgage Awards 2018 were judged by:
- David Hollingworth, associate director of communications at London & Country Mortgages
- Andrew Montlake, director at Coreco
- Aaron Strutt, product and communications manager at Trinity Financial
Methodology
Trinity Financial compiled our shortlists, based on best buy data over 12 months (supplied April 2018). Shortlists of lenders with the best rates were given to the judges, who voted for winners and runners-up, looking at rates, fees, penalties, flexibility, service and treatment of new and existing customers. Judges voted for their innovator of the year, but the Moneywise editorial team made the final decision. Data supplied by Trinity Financial on 14 May 2018. Mortgages are for purchase or remortgage unless otherwise stated. * Indicates mortgages only available directly from the lender and not via an intermediary.
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