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Is this the best time ever to be a homeowner?

A surge in cheap fixed rate mortgages mean borrowers can protect themselves against interest rate rises

New fixed rate mortgages have been appearing thick and fast recently leading to highly competitive rates that even undercut the best variable rates. This means that in some cases homeowners can protect themselves against future rate rises as well as getting the best deal. Santander, Tesco, and HSBC, have all launched a two year 1.99% fixed rate mortgage in the last month significantly lower than normal fixed rate deals. In contrast the best variable rate is ING Direct’s 2.49% mortgage.

However, these super cheap deals do come with a catch or two. There are quite high arrangement fees to pay up front. For example the HSBC deal comes with a fee of £1,999 or £1,499 if you have an HSBC current account. Moreover, all these deals require a whopping 40% deposit which excludes the vast majority of first time buyers. If you can meet this condition you will be getting a very good deal.Monthly repayments on a typical £150,000 loan would be £635.05, and the total cost over the two years including fees for a non-HSBC  customer would be £17,240.

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