Mortgage lenders increase shorter term rates although Metro Bank still offering 4.39% two-year fix

by Aaron Strutt

May 18 2023

Metro Bank is offering one of the most competitively priced shorter-term mortgages.

The 4.39% two-year fixed rate is available to borrowers purchasing a property or remortgaging. Applicants will need a 40% deposit to qualify, and the mortgage maximum loan size is £1 million. The rate rises by 0.20% for customers taking interest only. 

After the fixed period, the mortgage reverts to the lender's current 7.75% standard variable rate, and there is a £999 arrangement fee. The overall cost for comparison is 7.4% APRC representative.

Aaron Strutt, product director at Trinity Financial, says: “Two-year fixed-rate mortgages have increased in recent weeks and the Bank of England base rate rises are pushing up costs.

"Many of our clients are taking shorter-term deals rather than three or five-year fixes. Capital Economics is forecasting the base rate will be cut to 3% end of 2024.”

Representative example: A capital and interest mortgage of £250,000 payable over 30 years, initially on a 4.39% fixed rate for two years and then on a variable rate of 7.75% for the remaining 27 years, would require 24 monthly repayments of £2,500.85 followed by 336 monthly repayments of £3,525.96. The total amount repayable would be £1,244,742.96 made up of the loan amount, plus interest (£744,743.04) and £999 (product fee), £50 (final repayment charge), £35 (completion fee). The overall cost for comparison is 7.4% APRC representative.

What are Metro Bank's mortgage lending niches?

• Enhanced income multiples for residential re-mortgages and purchases (minimum income levels apply). The bank also lends more to fully qualified, registered and practising Solicitors, Barristers, Medical Doctors, Accountants, Actuaries, Vets, Dentists, Surveyors, Architects and Engineers
• Joint borrower, sole proprietor – only where the additional borrower(s) is an immediate family relative.
• Near Prime Residential Mortgages – for customers with a less than perfect credit profile or a low credit score.
• Maximum age 80 considered – term based on the oldest applicants age.
• Contractors – umbrella contractors accepted in the same way as limited company contractors.
• Interest-only mortgages – designed for mortgage applications where either all or part of the mortgage is to be arranged on an interest-only mortgage
• Self-employed – profit before taxation plus director's remuneration can now be used. An average is taken over the last two years if 100% of shareholders are on the mortgage and the sustainability of the business can be confirmed.

The bank also allows up to 20% of the outstanding balance can be overpaid each year without charge. Metro Bank and Barclays are two leading lenders that allow borrowers to share their space on platforms like Airbnb for up to 90 nights a year.

Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation 

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage