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Best mortgage lenders

There’s no universal measure of what makes a “best” lender – it’s more about which one offers what you need and what’s important to you.

However, there are definitely qualities that mortgage-hunters typically look for in a lender – such as low-interest rates, low fees and generous terms. Many consumers also want lenders with a great track record in customer service.

• Popular providers

Updated January 27th, 2020

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Name	Product	Best for
HSBC		HSBC tends to be a strong choice for those looking to switch mortgages. This bank regularly appears at the top of 75% mortgage tables for fixed-rate mortgages, whether you’re looking for two, three or five-year terms. It offers a free standard valuation, and you’ll often be able to make payments and overpayments (subject to conditions).	Compare now More Info		loading Fetching your data...
Halifax Mortgages		Halifax is part of Lloyds Banking Group, which was the most commonly used UK mortgage lender in 2019 (based on gross lending amounts). When you explore its range of mortgages, it becomes obvious why Halifax is so popular. It regularly appears at the top of the comparison tables for fixed-rate mortgages with various terms. There are also plenty of competitive tracker and buy-to-let mortgages to choose from. Some mortgages are designed to suit first-time buyers, while others will appeal to older borrowers. Halifax regularly tops the comparison tables for mortgage with a 60% loan-to-value or lower. It recently raised its upper age for mortgage owners to 80. Many large lenders have since followed suit. While there are plenty of smaller building societies with no maximum age limit at all, they usually struggle to compete with the rates on offer from Halifax.	Compare now More Info		loading Fetching your data...
First Direct		Customer service might not be too important throughout the term of your mortgage. In fact, if you make repayments on time every month, you may not need to communicate with your mortgage provider at all. However, if you fall behind on repayments or want to make changes to your mortgage, great customer service suddenly becomes integral. First Direct has won many awards for sterling customer service over the years, including “Best Customer Service” and “Most Recommend Bank” at the 2017 British Bank Awards.	Compare now More Info		loading Fetching your data...
Leeds Building Society Mortgages		Leeds Building Society regularly appears at the top of buy-to-let mortgage comparison tables. It offers fixed-rate, tracker and variable-rate buy-to-let mortgages. There are mortgages specifically for Small Houses in Multiple Occupation (HMOs).	Compare now More Info		loading Fetching your data...
Nationwide Building Society mortgages		Nationwide Building Society is worth a look. It also offers 95% mortgages, plus first-time buyers will get £500 cashback upon completion. It is happy to consider mortgages linked with first-time buyer schemes, such as Help To Buy, Shared Ownership and Right To Buy. You may also want to check out its range of Family Deposit Mortgages, which allows family members to gift a deposit.	Compare now More Info		loading Fetching your data...

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• How to search for the best lenders

  In spite of our recommendations, it’s important to do your own research to learn which lenders will work best with your situation.

  Many people will search for the best mortgage deal through price comparison websites. These websites will list the cheapest deals based on the criteria you select. However, some lenders don’t appear on these websites and some price comparison websites prioritise affiliate lenders, even if they’re not the best.

  Alternatively, you could use a mortgage broker. This individual has expert knowledge of mortgage providers’ lending criteria, which could be invaluable if you have a low income or have unique circumstances. They’ll search for the best deal on your behalf, including those that are only available through broker services, so you can feel confident about being recommended a deal that you’ll actually be approved for. You’ll pay a fee for their services though.

Who are the best mortgage lenders? A summary.

While there is no universal measure of what makes a “best” lender, we believe these lenders stand out from the others.

• Halifax: Best for residential mortgages
• HSBC: Best for remortgaging
• First Direct: Customer service
• Newcastle Building Society: Best for first time buyers
• Leeds Building Society: Best for buy-to-let
• Lloyds Bank: Best for low income or low deposit
• Halifax: Best for retirement

How mortgages work

Whether you’re buying a house, unit or apartment, most of us don’t have enough money tucked away to cover the full purchase price. In order to get the full amount needed to buy a property, we need to borrow money through a mortgage.

A mortgage is an arrangement where you borrow money from a lender to buy a property, whether as a home or investment (such as a buy-to-let). It usually lasts for between 25 – 35 years.

In exchange for allowing you to borrow this money, your lender will charge you interest. This can be either a fixed rate mortgage at a certain rate, or a variable rate mortgage.

You’ll usually pay your loan off in instalments known as repayments. These are usually required every month.

A mortgage can also be known as a home loan or as home finance.

Largest lenders by market share

Mortgage lender	Market share
Lloyds Banking Group	15.6%
Nationwide Building Society	14.4%
Royal Bank of Scotland	12.9%
Santander UK	10.4%
Barclays	8.4%
HSBC Bank	6.4%
Coventry Building Society	3.7%
Virgin Money	3.4%
Yorkshire Building Society	2.9%
TSB	2.7%

These figures are taken from UK Finance (formerly the Council of Mortgage Lenders) and are based on gross lending amounts.

Best mortgage rates 2020

Fixed-rate mortgages continue to be popular in the UK due to the reliability of knowing how much you need to pay each month. However, finding and keeping the best fixed mortgage rate can be problematic. Many deals often start with a low, fixed-rate but often switch into a higher variable rate after a set period of time. This means you can end up paying more than you expected if you end up on the variable rate.

We have created a number of tables each of which shows a list of mortgage lenders and the rates they have for certain deals with different criteria.

Best fixed-rate mortgage rates for 2020

• Best 2 year fixed rate mortgages
• Best 3 year fixed rate mortgages
• Best 5 year fixed rate mortgages

Provider name	Rate	APRC	Initial Monthly Payment	Total amount repayable
NatWest Fixed	1.41%	3.80%	£791.44	£311,450.08
NatWest Int Sols Fixed	1.41%	3.80%	£791.44	£311,450.08
Royal Bank of Scotland Fixed	1.41%	3.80%	£791.44	£311,450.08
Halifax Fixed	1.43%	3.80%	£793.31	£310,450.32
NatWest Int Sols Fixed	1.45%	3.80%	£795.18	£311,411.66

Overall representative example
If you borrow £170,000 over a 25-year term at 1.75% p.a. (fixed) for 62 months reverting to 4.74% p.a. (variable) for the remaining term, you would make 62 monthly payments of £700.04 and 238 monthly payments of £912.95. The total payable would be £261,424.58, which includes interest of £90,685 and a product fee of £495. The overall cost for comparison is 3.6% APRC representative.

Provider name	Rate	APRC	Initial Monthly Payment	Total amount repayable
HSBC	1.69%	3.60%	£817.85	£305,736.52
Barclays	1.73%	3.70%	£821.67	£306,931.81
Platform	1.79%	4.20%	£827.41	£326,724.67
HSBC UK	1.84%	3.70%	£832.22	£306,843.26
Coventry building society	1.85%	4.10%	£833.18	£322,120.46

Overall representative example
If you borrow £170,000 over a 25-year term at 1.75% p.a. (fixed) for 62 months reverting to 4.74% p.a. (variable) for the remaining term, you would make 62 monthly payments of £700.04 and 238 monthly payments of £912.95. The total payable would be £261,424.58, which includes interest of £90,685 and a product fee of £495. The overall cost for comparison is 3.6% APRC representative.

Provider name	Rate	APRC	Initial Monthly Payment	Total amount repayable
Halifax	1.76%	3.30%	£824.54	£296,625.92
Barclays	1.78%	3.30%	£826.45	£297,148.93
HSBC UK	1.79%	3.30%	£827.41	£296,538.80
HSBC UK	1.79%	3.30%	£827.41	£296,038.80
Natwest	1.79%	3.30%	£827.41	£297,582.00

Overall representative example
If you borrow £170,000 over a 25-year term at 1.75% p.a. (fixed) for 62 months reverting to 4.74% p.a. (variable) for the remaining term, you would make 62 monthly payments of £700.04 and 238 monthly payments of £912.95. The total payable would be £261,424.58, which includes interest of £90,685 and a product fee of £495. The overall cost for comparison is 3.6% APRC representative.

These rates were taken on the 22 January 2020 from Moneyfacts.

• Which bank offers the best mortgage rate?

  While there is a range of factors to consider when choosing a mortgage lender, interest rate is probably one of, if not the, most significant. There’s no one “best” bank for this though, as each lender will cater for different individual circumstances and rates will vary over time. This is why it’s important to identify what you’re looking for and compare lenders based on your own criteria.

• Which factors should I take into account when choosing the best rate?

  The introductory rate is one of the most important factors to consider when comparing mortgages, but it doesn’t tell the whole story. Here are some other elements to take into account.

  • Term length. Fixed-rate mortgages with longer terms have higher rates, but you’ll be protected against potential rate rises for longer. It’s often recommended to apply for short-term mortgages and remortgage once the introductory term ends, but there’s no guarantee you’ll be in a financial position to be approved for a remortgage at that time, which is another reason why some people prefer the security of long-term mortgages.
  • Extra fees. Most mortgage products will have one-off fees attached to them. These should be considered as well as the interest rate. The best way to compare mortgages is to calculate the total amount you’ll spend during the introductory term. The main fee to look out for is an “arrangement fee”. This often adds up to several hundred pounds, even though some mortgage products don’t include this at all. Some lenders will give you the option to add any fees onto the mortgage, but this should be avoided whenever possible, as it will mean paying interest on them for the entirety of your mortgage term.
  • SVR (standard variable rate). This is the rate you’ll be switched onto after the introductory rate ends. It’s best to remortgage before you’re moved on to this significantly higher rate, but that’s not always possible, so it’s worth bearing this rate in mind.
  • Total repayable. This is the total amount you’ll owe over the length of your mortgage. This won’t be too important if you’re planning to remortgage after the introductory term ends, but it’s still a useful figure to help you compare products. The easiest way to reduce your total repayable is to cut the length of your mortgage. Your monthly repayments will be higher, but the amount of interest paid will drop significantly.
  • LTV (loan-to-value). This is the amount of money you’re borrowing from your lender, expressed as a percentage of your property value. With a higher deposit, you’ll be able to access mortgages with a lower LTV ratio. These mortgages have lower rates, plus you’ll pay less interest in total.

What are the different type of mortgages?

You can boil down UK mortgages into the following types:

Fixed rates
Unlike a variable rate home loan where repayments move up and down, fixed rate repayments remain unchanged for a set period. This means that for the length of your fixed rate term — usually between one and five years, but sometimes as great as 10 or even 15 years — you’ll know what your repayments will be.

Standard variable rates
A variable rate home loan is a home loan product which has an interest rate which fluctuates up or down over time as your lender sees fit. Unlike a fixed rate home loan where the rate is locked in for a fixed term, the interest rate of a variable rate mortgage moves up and down in accordance with market changes.

Tracker mortgages
Tracker mortgages move in line with a nominated interest rate which is usually the Bank of England base rate. The actual mortgage rate you pay will be a set by your lender at an interest rate above or below the base rate. When base rate goes up and down, your mortgage rate will go up and down by the same amount.

Discount rate mortgages
A discount mortgage works by setting a discount on a lenders standard variable rate (SVR). This means the interest rates can go both up or down in line with the SVR.

Interest only
Standard home loans have repayments that include both the interest and a small proportion of the capital. If you remove this capital portion from the equation, you can reduce the amount you make in repayments each month. This can be good for some borrowers, including investors and those building a property, but there is an added risk with this type of loan as your loan amount doesn’t reduce, meaning you will still have to pay the whole capital off at the end of the term.

Offset mortgages
Offset mortgages are linked up to your savings account and can help to reduce your interest payments. Any money deposited into the account offsets interest on your mortgage. For example, if you have a mortgage of £100,000 and savings of £25,000, your mortgage interest is calculated on £75,000 for that month.

This cuts the amount of interest you pay but the mortgage rate is likely to be more expensive than on other deals. You can still access your savings if you need to but the more you offset, the quicker you’ll repay your mortgage.

Capped rate mortgages
This is a type of variable rate mortgage but one with a limit or cap on how high your interest rate can rise. So you can benefit from low interest rates but also enjoy the comfort of knowing that your interest rates will never exceed a certain level.

Cashback mortgages
When you take out this kind of mortgage you also receive some money back. This is normally a percentage of the loan.

Flexible mortgages
This option is available on many other types of mortgage and it allows you some flexibility when making repayments. You can choose to pay more when you can afford it and if you have already overpaid then you can pay less or take a payment holiday. These types of mortgages tend to have higher interest rates than other deals.

95% and 100% mortgages
These types of mortgages are designed for people that either have no deposit or are struggling to save a significant deposit. Loan-to-value rates of 95% or 100% typically incur higher interest rates. Although they were previously widely offered, 100% mortgages fell out of favour after the financial crisis, and now only tend to be offered when a family member is able and willing to provide a guarantee secured against their own residential property.

Buy-to-let mortgages
Buy to let mortgages are for people who want to buy a property and rent it out rather than live in it themselves. The amount you can borrow is at least partly based on the amount of rent you expect to receive.

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Struggling to understand mortgage jargon?

We know that sometimes it seems as though the financial world operates in a different language altogether making it hard to understand what you’re getting into when applying for a mortgage. So to help you out, we have created a mortgage A-Z to simplify the terms your most likely to come across in your application.

Mortgage fees

1. Upfront fees

• Mortgage arrangement fee. This is the fee that your mortgage lender charges to set up your mortgage.
• Product fee. Many lenders will charge you a product fee which is the cost of choosing a specific mortgage.
• Valuation fee. This is a fee charged by your mortgage lender for them to carry out valuation of the property you would like to purchase the mortgage for.
• Legal fees. A legal professional will need to look over your application to make sure it’s compliant.
• Stamp duty. If your property costs over £125,000 you’ll have to pay stamp duty, which is a certain type of land tax. You’ll usually have to pay this tax as an upfront fee within 30 days of settlement.

2. Ongoing fees

• Repayments. The biggest cost of a mortgage is in the regular repayments you have to make on it. Your repayment amount is set by your lender and takes into account the interest rate, how often you’ll be repaying and the length of the loan.

3. Exit fees

• Early Repayment Charge. If you repay your mortgage early or overpay more than your overpayment allowance some mortgage providers will charge you an early repayment fee.
• Redemption administration fee. This is a fee charged by your lender in order to close your mortgage at the end of the term.

Applying for a mortgage

• Make sure your credit report is in order. You can get a copy of your credit report online. Its a good idea to make sure your address history is accurate and it also might help to be registered on the Electoral Roll at your main address.
• Ensure your ID and address documents are up to date. Some mortgage lenders will ask you to provide proof of ID or address to satisfy money laundering requirements and these must be the original document, not a copy, and be current and valid.
• Where is your deposit coming from? All lenders will want to see where your deposit is coming from and whether it is a gift or part of your savings. For example, if the money is coming from your savings account then you will be required to show bank statements as evidence.
• Have all your income proof ready. Your lender will want to know how much you earn, so it is a good idea to have your income proof readily available for your application. You may be required to present your latest 3 months payslips/bank statements, or your latest P60. The documents you will need to supply depends on the requirements of the specific lender.
• Check your solicitors are on the lender’s panel. Lenders these days are extra careful about which lawyers you are using to target mortgage fraud. Ask your solicitor if they can work with most lenders, make sure they are a reputable firm.
• Are you getting a joint loan? Think about how strong your relationship is with the other party. Changes to your relationship could make it hard if one party wishes to sell their part of the property.
• What are your plans for the property over the next few years? Match your mortgage to your future plans. For example, avoid taking out a fixed rate loan if you plan to sell the property shortly after buying it. Many fixed rate mortgages charge a penalty if you pay them off before the end of the set period which can be expensive.
• Are you eligible for the loan? Borrowers generally need to be over 18 years of age. There are other requirements too, but these depend on the lender. Some will want you to have a good credit rating. Others might not allow you to buy inner city apartments. Always read these before applying.

Frequently asked questions

• How much can I borrow?

  The amount of money you can borrow for a mortgage depends on your choice of mortgage provider and your personal circumstances. If you have a large deposit and are deemed a responsible borrower, you’ll often be approved to borrow more. However, most mortgage lenders will allow you to borrow no more than 4-5x your annual income.

• How do you get a mortgage?

  You can apply for a mortgage by contacting a mortgage lender. This can be done directly, perhaps visiting a local branch, calling or filling out an online application form. Alternatively, you can use a mortgage broker to apply on your behalf.

• What are mortgage interest rates?

  Your interest rate determines the monthly interest you’ll pay on your mortgage balance. Typically, your mortgage will include an introductory rate for the first few years, which converts to a higher standard-variable rate thereafter.

• What is a mortgage in principle?

  A mortgage in principle is a guarantee issued by a mortgage lender, stating that it will lend a specific amount of money once you find a property. However, this agreement typically only lasts 90 days and your property will have to pass your lender’s checks.

• What happens to your mortgage when you move house?

  If you’re planning to move house, you’ll need to notify your mortgage provider. It may be able to port your mortgage onto the new property. If not, you’ll need to remortgage before you move.

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