Five-year fixed contractor mortgage deals are now at their lowest rate for 6 years with rates starting at 4.49%. This contrasts with 2 years ago when the best deals were over 5.5%. However, to take advantage of these deals, you do need to put down a sizeable deposit.
Experts believe that this option is well worth thinking about for people who are currently shopping for a contractor mortgage. The possibility of a hung parliament and the chance of interest rate increases make fixed-rate deals an attractive proposition for people on tight budgets.
The Co-operative Bank and Britannia are both offering the 4.49% deal but borrowers will need to put down 25% of the house purchase price as a deposit. Unfortunately, the best rate available for people who can only afford a 10% deposit is 6.69% from Yorkshire Bank.
Rates on two-year fixed deals have also dropped and it’s now possible to get a rate of 4.62% whilst three-year fixed contractor mortgages can be obtained at a rate of 5.3%.
However, before you rush off and buy one of these fixed-term deals, it’s important to check out the fees that the lending institutions are charging. In some cases these can amount to the best part of one thousand pounds.
Pricing on fixed-term deals is unlikely to get much lower and Ray Boulger from the mortgage broker John Charcoal believes that tracker mortgages will work out cheapest.
People who can afford to put down a 35% deposit could take advantage of the lifetime tracker offering from First Direct. With the Bank of England base rate currently standing at 0.5%, the additional 1.89% charge means a pay rate of 2.39%. This could prove to be a good option for people who can afford to see the payments increase in line with interest rates.
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