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Money Doesn’t Grow on Christmas Trees

Moneyfacts.co.uk

Saturday 15th December 2018

Savings           ISAs           Mortgages          Cards          Banking          Loans          Business

Start saving for Christmas…2019!

 

Savers have been urged to start thinking about saving for Christmas 2019 after research revealed households are expected to spend just over £1,200 on the festivities this year. While it may seem a little premature to start thinking about next Christmas before this one has even happened, some forward planning will almost certainly pay dividends in a year’s time – and if you start saving into a regular savings account, you could maximise the benefits even further.

Many of the best regular savings deals are fixed for 12 months, which means that, if you start now, your savings account will mature just in time for next year’s festive spending spree. If you save £50 a month, that’s £600 that you will have at your disposal this time next year with interest still to come.

See more on this story and our Best Buy savings accounts

 AERNotice / Term 

Easy Access
(no bonus)

1.50%

None

View
table

Easy Access
(with bonus)

1.50%

None

View
table

Fixed Rate Bonds

2.75%

7 Years

View
table

Fixed Rate ISAs

2.27%

5 Years

View
table

Variable Rate ISAs

1.45%

None

View
table

Regular Savings Account

3.50%

12 Months

View
table

Notice Accounts

1.87%

120 Days

View
table

Monthly Interest Accounts

1.87%

120 Days

View
table

Deal of the week

Socially responsible investing 

Introducing Nutmeg’s new socially responsible portfolios. These portfolios are built using environmental, social and governance data, with a view to investing in companies that do business in a fair and progressive way. You’ll be able to see a range of scores for your socially responsible portfolio at any time, in your dashboard and in the app. You can invest in one of these portfolios through a stocks and shares ISA, a general investment account or a Lifetime ISA (LISA). Easy, online set up in minutes. Remember that with all investments, your capital is at risk.

Three of the best short-term bonds

 

Fixed rate bonds remain one of the best ways to secure a guaranteed savings return, and with a short-term bond you won’t tie your funds up for too long.

       

Offering the market-leading short-term rate is Metro Bank, with its 18-month Fixed Term Savings Accountpaying 2.25% on its anniversary. Once an opening deposit of at least £500 has been made, no further deposits are allowed and funds cannot be accessed before maturity. The bond can be opened in branch or online, and then managed over the phone as well. However, savers must hold another Metro Bank account, or will have an Instant Access Account opened for them, through which transactions will be made.

  

In second place is Bank of London and The Middle Eastwhose 18-month Premier Deposit Accountoffers an expected profit rate of 2.25%, paid on its anniversary. This Sharia’a compliant bond, which must be opened online and then can be managed by post and phone as well, requires an opening deposit of £10,000 and does not permit additions or early access. Savers must also hold or open a linked current account for transactional purposes.

     

Completing the top three is Al Rayan Bank with its 18-month Fixed Term Deposit. Paying an expected profit rate of 2.22% on a quarterly basis (2.20% gross), this Sharia’a compliant bond requires an opening deposit of £1,000, and as is common in the sector it does not allow additional deposits or early access to funds. However, it can be managed via all channels, offering some welcome flexibility.   

Shawbrook Bank one-year ISA goes top

 

Moving to the top of the one-year fixed rate ISA chart after raising selected rates this week is Shawbrook Bank.

       

Now paying a market-leading return of 1.66% on maturity, 1 Year Fixed Rate Cash ISA Bond Issue 27requires an opening deposit of at least £5,000.

Transfers in are welcome, and additional deposits can be made too, while it is also possible to access funds early on the loss of 90 days’ interest.

The same interest penalty will apply if transferring away from this ISA, which must be opened online, but can then be managed over the phone as well.

If you’d prefer to secure a tax-free income from your savings, a version of the ISA that pays an annual rate of 1.65% on a monthly basis is available too.

See more Best Buy short-term fixed rate ISAs     

First-time buyer rates at record low

    

First-time buyers have received a welcome boost after new Moneyfacts analysis revealed mortgage rates for those with a deposit of just 5% have dropped to a record low. According to the latest Moneyfacts UK Mortgage Trends Treasury Report, the average mortgage rate at 95% loan-to-value (LTV) has fallen by 0.09% in the last month to 3.54%, the lowest rate ever recorded. Just a year ago, the typical rate on a first-time buyer mortgage stood at 4.15%, while 10 years’ ago, in December 2008, they were as high as 6.52%.

       

At the same time, the number of product options on offer to first-time buyers has notably increased too, with 304 mortgages now available to those with a 5% deposit, compared with 217 in December last year and just 17 a decade ago. This highlights how far the market has come, with lending to low-deposit borrowers almost non-existent in the wake of the financial crisis; now, lenders are far more willing to operate in this sector, and are even more keen to help those with a slightly higher deposit of 10%, where availability has hit a record high of 656 products.

     

See more on this story and the Best Buy first-time buyer deals

 RatePeriodAPRC 
Fixed Rate1.55%to
28/02/2021
4.9%View
table
Discounted
Variable
1.54%2 Years4.8%View
table
Variable &
Tracker
2.05%Term2.2%View
table
First Time
Buyer
2.55%
(DV)
2 Years4.9%View
table
Remortgage1.55%
(F)
to 
28/02/2021
4.9%View
table
Buy-to-let1.71%
(F)
to
31/01/2021
4.6%View
table

 

Rep Example: £150,000 mortgage over 25 years initially at 2.55% variable for 24 months reverting to 5.24% variable for term. 24 monthly payments of £676.71 and 276 monthly payments of £881.32. Total amount payable £259,660.36 includes loan amount, interest of £109,485, valuation fees of £0 and product fees of £0. The overall cost for comparison is 4.9% APRC representative. 

Deal of the week

2-year fixed rate mortgage

Looking to fix your mortgage repayments over the short term? Leeds Building Society has just lowered the rate on a two-year deal that could fit the bill: available to borrowers with a 25% deposit, the rate of 1.72% will stay unchanged until 31 March 2021, before reverting to a discounted variable rate of 4.69% to 31 March 2024 and then 5.69% for term. There’s a fee of £999, but valuation fees are free.   

 

Rep Example: £150,000 mortgage over 25 years initially at 1.72% fixed for 27 months reverting to 4.69% variable for 36 months and 5.69% variable for term. 27 monthly payments of £615.53, 36 monthly payments of £828.99 and 237 monthly payments of £900.08. Total amount payable £261,029.91 includes loan amount, interest of £109,782, valuation fees of £0 and product fees of £999. The overall cost for comparison is 4.8% APRCrepresentative.

Three of the best buy-to-let mortgages

     

If you’re a landlord with a mortgage on your rental property who wants to keep your repayments low, a two-year buy-to-let mortgage could be for you.

    

Top of the chart is Post Office Money, with a fixed rate deal for those who have a deposit/equity of at least 25% (75% loan-to-value). The market-leading rate of 1.69% is fixed until 31 January 2021, when it will revert to 5.24% variable for the rest of the term. An arrangement fee of £1,495 must be paid to secure this deal, which comes with a free valuation too.

    

Post Office Money secures second place, with this 60% LTV deal at a rate of 1.71%, again until 31 January 2021. While the revert rate remains the same as the previous deal, the product fee is £995. Valuation fees are free, and legal fees are free for remortgagors.

  

Completing the top three is Leeds BS, which is offering a rate of 1.71% that’s fixed to 31 March 2021, when it will revert to a discounted variable rate of 4.99% for another three years and then 5.99% for term. A deposit/equity of 40% (60% LTV) is required on a deal that comes with a fee of £999, but offers a free valuation (max £999) and for remortgagors, help towards costs.

Yorkshire Building Society two-year fix hits charts

 

Lowering a number of its mortgage rates this week and moving into our two-year fixed rate mortgage chart as a result is Yorkshire Building Society.

 

 

Available to house purchase borrowers with at least a 10% deposit (90% loan-to-value), the new rate of 1.96% is fixed until 31 March 2021, when it will revert to a discounted variable rate, which is currently 4.25%, for a further three years, before moving to an Existing Borrowers Rate, currently 4.99%, for the rest of the term.

As well as offering a low fee of £495, this deal serves up the added incentive of a free valuation and £250 cashback.  

 

See more Best Buy two-year fixed rate mortgages

Personal loan rates starting to rise

 

Those looking to consolidate their debts – or perhaps recover from a festive overspend – will be disappointed to learn that average loan rates are beginning to rise. Indeed, our latest data shows that rates have increased on all tiers from £2,000 to £25,000 during the last quarter – so much so that the £7,500 tier has hit its highest point in two years.

  

The figures, taken from the latest Moneyfacts UK Treasury Report (Unsecured Personal Loans, Credit Cards and Overdrafts), highlight the general uptick across the market, with the average rate for a £5,000 loan over three years, for example, rising from 6.7% APR in October to 6.8% APR today, and an average loan of £7,500 over five years now charging 4.8%, up from 4.6% three months ago. “Gone are the record-low rates of unsecured personal loans,” said Rachel Springall, finance expert at Moneyfacts. “But while rates are on the rise, there are still some good deals to be had within the Best Buys, so borrowers thinking about consolidating their debts shouldn’t be too disheartened.”

 

See more on this story and search for the best personal loan

 Total
Amount
Repayable
Monthly
Payment
Rep.
APR
 

£5,000
over 3
years

£5,262.12

£146.17

3.4%

View
table

Representative Example: Based on a loan of £5,000 at 3.40% per annum fixed. Representative 3.4% APR. Total amount repayable £5,262.12 at £146.17 per month for 36 months.

£7,500
over 5
years

£8,038.80

£133.98

2.8%

View
table

Representative Example: Based on a loan amount of £7,500 at 2.80% per annum fixed. Representative 2.8% APR. Total amount repayable £8,038.80 at £133.98 per month for 60 months.

£10,000
over 5
years

£10,718.40

£178.64

2.8%

View
table

Representative Example: Based on a loan amount of £10,000 at 2.80% per annum fixed. Representative 2.8% APR. Total amount repayable £10,718.40 at £178.64 per month for 60 months.

Deal of the week

Personal

loan

If you’re looking to take out a loan of £7,500 and repay it over three years, AA is offering an unsecured loan that could be for you.

  

With a rate as low as 3.3% APR, this loan is available to new and existing borrowers who are between 21 and 70 years old. Rates are dependent on your credit rating.

        

Rep example: Based on a loan of £7,500 at 3.30% per annum fixed. Representative 3.3% APR. Total amount repayable £7881.84 at £218.94 per month for 36 months.

Deal of the week

One-year business bond

If you’re a business owner looking for an account that can offer a great return on your savings if you don’t mind locking your money away for a year, this deal from Virgin Moneycould be the one for you.

 

Paying a rate of 1.60% yearly, the post and internet-operated 1 Year Business Fixed Rate Savings Account 9 is available from a minimum investment of £1,000. 

 

As is common in the sector, once open no additional deposits can be made, and funds won’t be accessible until the end of the term (20.1.20). 

 

A version of the account paying a slightly lower rate of interest on a monthly basis is also available.

The best 0% interest credit cards

          

While most of the headline-grabbing credit cards tend to offer either a long 0% deal on balance transfers or a lengthy interest-free period for purchases, 0% interest credit cards can offer both.

 

Taking the top spot is MBNA, whose MBNA All Round 28/28 Credit Card Visa gives 28 months’ interest-free grace on both purchases and balance transfers, as well as on money transfers. The card, which has an introductory balance transfer fee of 2.72% and a money transfer fee of 4%, can be applied for online or over the phone.

     

In second place is Sainsbury’s Bank, with its Dual Offer Credit Card Mastercard offering 27 months’ interest-free on both purchases and balance transfers. There is an introductory balance transfer fee of 3.00%, but no annual fee on a card that can be applied for online or over the phone. Additional Nectar points are on offer to Sainsbury’s shoppers too.

Completing the top three is Virgin Money, whose 26 Month All Round Credit Card Mastercard offers 26 months of interest-free purchases and balance transfers (with an introductory transfer fee of 2.90%). There is no annual fee and the card can be applied for online or over the phone.

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