10 Must Trusted banks for a mortgage in Uk
When you’re looking for a mortgage lender, the best bank or building society for you will depend on a number of factors.
Once you’ve decided which type of mortgage you want to go for, whether it’s a fixed-rate or variable–rate deal, you’ll probably be looking at which banks are offering the lowest interest rates.
However, you should also take the set-up fees into account and look at the overall cost of your mortgage. This includes the monthly repayments plus the fees during the initial deal period, after which your rate reverts to the lender’s standard rate and you are free to switch to a new deal. A lower interest rate doesn’t necessarily mean a cheaper deal overall.
Depending on your circumstances, other considerations when choosing a lender include its approach to self-employed people, the maximum amount it will lend you, whether it offers mortgages to people with a poor credit history and whether it offers special products such as guarantor mortgages.
Which are the biggest mortgage lenders in the UK?
The 10 largest mortgage lenders in the UK according to industry body UK Finance, based on those that lent the most in 2019, are:
- Lloyds Banking Group (including Halifax and Scottish Widows)
- Nationwide BS
- NatWest Group (including Royal Bank of Scotland)
- Santander UK
- HSBC Bank (including First Direct)
- Virgin Money Plc (including Clydesdale and Yorkshire Banks)
- Coventry BS
- Yorkshire BS
- TSB Bank
You might feel more comfortable going for a brand you know, and the biggest lenders are likely to offer the biggest choice of mortgage products, but you should look at the whole market to find the best deal for you, especially if you have more unusual circumstances. Speaking to an independent mortgage adviser is the best way to do this.
Some of the smaller building societies frequently offer good deals and there are also specialist lenders that might offer what you need.
Banks with the best mortgage rates
The mortgage deals on offer change quickly so the banks and building societies offering the best interest rates and overall deals today won’t necessarily be the same tomorrow.
Big names you might find in best buy tables if you want a fixed-rate mortgage include Barclays, Nationwide, NatWest, Royal Bank of Scotland and Virgin Money, and for variable rates they might include Clydesdale and Yorkshire Banks.
However, you should always check the best mortgage rates and deals yourself or speak to a mortgage adviser before choosing a lender (although there are a few lenders that don’t offer their mortgages through advisers).
The vast majority of mortgages taken out are fixed rates – around 85% to 92% since the beginning of 2017 according to data compiled by the Financial Conduct Authority.
How much will lenders lend to you?
There are now very few lenders offering mortgages above 90% LTV although there are some products available that let you borrow more than this if you have help from family or friends. For example, they can put aside some of their savings as security for your loan or agree to a percentage charge on their own property.
The lower your LTV the cheaper your mortgage is likely to be, so the more deposit you can save the better. You should also bear this in mind when deciding how much to spend on a property or how much to borrow when you’re looking for a remortgage deal.
Lenders used to have different rules on how much of your earnings you can borrow (the loan-to-income ratio) but overall affordability is now the most important test – lenders will look at your income and outgoings to decide what you can afford.
Since changes to mortgage rules in 2014, it’s more difficult to borrow more than four-and-a-half times your individual or joint salary.
Which are the best mortgage lenders for first-time buyers?
Mortgage lenders offering deals specifically targeting first-time buyers that let you borrow up to 100% of the property’s value include Buckinghamshire Building Society with its Family Assist mortgage for borrowers in England and Wales. Your parents or grandparents can use up to 60% of the equity in their home to guarantee your mortgage by having a charge placed on it. You can also choose to have a mortgage term of up to 40 years.
Barclays’ Family Springboard mortgage lets family or friends put aside some of their savings to the value of 10% of the property price to act as security for your loan. They get their money back plus interest after five years and you can then continue with your mortgage without their help.
Tipton & Coseley Building Society’s Family Assist mortgage combines the features of the Buckinghamshire and Barclays mortgages. Your relatives can either have a charge put on their property for 20% of the amount you are borrowing or put aside the 20% from their savings.