What is the best mortgage provider in the UK?

The UK has some of the highest house prices in Europe, and the average cost of buying a home is £274,000. This means that homeowners are often required to take out a large loan to cover the costs of their new property.

However, the high price of housing makes it difficult for many people to get a mortgage. In fact, only around half of households in the UK are able to afford a mortgage. If you want to buy a house, you'll need to consider whether you qualify for a mortgage or not. 

Whichever mortgage you go with, you want to ensure that the provider of the mortgage offers competitive rates and fees. You also want to make sure that they have an easy-to-use website and good customer service. Here we've listed the top providers of mortgages in the UK.

The honest truth is, the variables of a mortgage are truly going to depend on your own financial situation and whatever agreement you can get with the lender. So throughout this article I will explain what good aspects are to look for in a mortgage as well as which lenders have historically received high ratings.

I am not a financial advisor. For any financial decisions contact a finance professional. This content is not to be taken as financial advise.

What Makes Mortgages Good or Bad

The main influencer of how good of a mortgage you are getting is to do with the interest rate on the mortgage. Whenever you take a mortgage out you will agree with the lender to pay an interest rate on the money borrowed. The higher the interest rate, then the more expensive the monthly repayment will be.

On the other hand, if the interest rate is lower, then the monthly payments will be cheaper. So ideally you will want to be looking for a mortgage rate with the lowest interest rate. However there are other variables depending on the type of mortgage your looking for which may influence your decision.

Rate Options

Along with the interest rate you will have the option of choosing a fixed-rate or variable rate mortgage. This rate is referencing the interest rate on the mortgage. Choosing the fixed rate will give you reassurance that over however long the agreed rate is over, your payment will not change. However, if the variable rate drops lower than the rate your fixed into, you won't be able to switch until your fixed rate period is over. On the other hand, you may be locked into an interest rate lower than the variable rate at the time which would result in you saving money

2022 Typical Mortgage Rates

If you're looking for a residential mortgage then you typically will be looking at a mortgage rate between 2-4%. This is quite a large boundary and may change from time to time but will depend specifically on the provider. These numbers may change so speak to the provider directly if you want to know more and they will be able to better guide you on your circumstances.

You can either choose to speak to mortgage providers directly or get help from a mortgage advisor.  Mortgage advisors help people who want to buy or sell homes get prequalified for loans that they can use to finance their home purchase or sale. They may also provide advice on how to best manage the financial aspects of owning a home.

Interest Only

Depending on your situation (usually for real estate investors/landlords) you may opt for an interest only mortgage. Interest only mortgages result in you only paying the interest for each monthly repayment. This results in you paying less than you would normally pay on a monthly basis however the payments over time will not go down as they would with a typical mortgage. Due to paying interest only and not any towards the principle loan then you will always have the same outstanding balance.

Other Benefits

Other options in a mortgage which may influence your decision are the certain cashback options you may get with the mortgage. In some cases upon a property purchase going thorough successfully you may be offered cashback which may just help to furnish your new property. This of course is likely a minor factor over the long term but still a nice bonus.

Top UK Mortgage Providers

1. Nationwide Building Society

Nationwide Building Society has been providing mortgages since 1885. They are one of the largest providers of home loans in the United Kingdom. Their mortgage products include fixed rate mortgages, variable rate mortgages, interest only mortgages, re-mortgages, buy-to-let mortgages and commercial mortgages.

2. Barclays Bank

Barclays Bank was founded in 1793 and is now one of the world’s leading financial institutions. They offer personal banking services through their branches across the UK. Barclays offers private banking, corporate banking, investment management services, retail savings accounts, current accounts, credit cards, debit cards and mortgages.

3. HSBC

HSBC was founded in 1865 and is one of the oldest banks in the world. As well as offering consumer banking services, they provide business banking services, investment banking services, asset management services, and insurance.

HSBC mortgages are available for both owner-occupiers and first-time buyers. You can apply for an HSBC mortgage online, by telephone, or in person at a branch location.

4. Santander

Santander is one of Europe's biggest banks by market value. Founded in 1850, it is based in Spain and operates throughout Europe, Asia and North America. It provides both personal and business banking, investment banking, mortgages, wealth management and insurance.

5. Royal Bank of Scotland (RBS)

RBS was founded in 1695 and is one of the UK's oldest banks. It is headquartered in Edinburgh, Scotland. The bank provides a range of products including personal and business banking, mortgages, investments and insurance.

6. TSB

TSB is one of the UK’s most established banks. It was founded in 1855 and is listed on the London Stock Exchange. The bank provides a wide range of products and services including personal and business banking, mortgages, investments, insurance, and credit cards.

TSBs mortgages are available for both owners-occupiers and first time buyers. You can apply online, by phone, or in person at any of the bank's more than 1,000 branches nationwide.

7. Yorkshire Building Society

Yorkshire Building Society was founded in 1872 and is one of the largest building societies in the UK. They operate  from offices in Leeds, Bradford, York, Sheffield and Doncaster. Yorkshire Building Society offers personal and business banking, residential mortgages, commercial mortgages, buy-to-lets, student finance and life assurance.

8. HSBC

HSBC is one of the world's largest banks. It was founded on January 10th 1865 and today employs around 200,000 people worldwide. HSBC offers a number of different financial services including personal banking, small business banking, corporate banking, international banking , real estate brokerage, mutual funds, retirement plans, auto financing and credit cards.

9. Virgin Money

Virgin Money was set up in 1998 when Norwich Union rebranded its money transfer business to Virgin Money. In 2008, Virgin Money launched Virgin Active, which offers health club memberships and gym equipment hire.

Virgin Money mortgages are available for both first-time buyers and existing homeowners. You can apply online via your computer, tablet or mobile device. Or you can call our dedicated team who will be happy to answer all your questions.

10. Nationwide

Nationwide is one of the UKs leading lenders with over 5 million customers. Nationwide has been providing home loans since 1866 and now also offer savings accounts, current accounts, ISAs, mortgages, car finance, travel insurance and pet insurance.

Nationwide mortgages are available for both new and experienced buyers. To apply for a mortgage with Nationwide, visit their website or contact them directly.

Summary

Mortgage lenders in the UK have become increasingly competitive in recent years. There are many different types of mortgages available today and choosing the right type will depend on your personal circumstances. If you're looking for a new house then you may want to consider buying a property with a mortgage. The lenders in our list may suite you however what may suite one person well may not suite another person well. Speak to mortgage advisors or other financial specialists for further support with selecting a mortgage.

Thanks for Reading

FAQ

Which are the best mortgage lenders?

Every year, we survey thousands of mortgage customers to reveal the lenders leading the way in customer service. We also analyse thousands of residential mortgages to find the lenders offering the most competitive deals.

Source: (which.co.uk)

When should I get a mortgage?

Before you start looking at properties, it’s a good idea to get a mortgage Agreement in Principle to help establish your budget. Agreements in Principle are normally valid for 90 days, which should give you plenty of time to find your perfect home. Once your offer on a property has been accepted, you can start the full mortgage application.

Source: (comparethemarket.com)

What fees are there if I decide to move?

If you want to move house before your fixed-rate ends, you'll need to see whether the provider will let you do something called “porting”. This is when you transfer the mortgage to your new home.

If you're not allowed to do this, you can face early repayment charges, usually between 1% and 5% of the outstanding mortgage. If you owed £150,000, changing your mortgage would cost £1,500–£7,500 in fees.

Source: (money.co.uk)

How to apply for a mortgage

You can apply for a mortgage with a bank or building society. You can apply directly with the lender, telling them which mortgage you’re interested in, or through a mortgage broker. You’ll need to provide identification documents and a proof of address, which might be your passport, driving licence or utility bills.

Source: (nerdwallet.com)