Tempted By Sub 1% Mortgage Rates?

Published / Last Updated on 20/07/2021

Given historically low interest rates, many banks and building societies over the last few weeks have launched 1% and sub 1% mortgage rate deals.  On first glance they look extremely tempting.

With the same mortgage provider, we decided to compare a 1% pa 2 year fixed rate with their 1.27% pa 5 year fixed rate.  Borrowing £150,000 on a £200,000 property valuation over 25 years, capital and repayment basis.


Application Fee Start

Remortgage App. Fee End Year 2

Remortgage App.  Fee End Year 4

Monthly Mortgage Payment

Total payments 5 years

*1% pa fixed 2 years with refix rate end year 2 and 4




£565pm X 60 months


1.37% pa fixed for 5 years




£584pm X 60 months


*Assumes able to remortgage on 1% deal each time rather than rates increasing.

You can either go for the security of a 5 year rate or chance it with lower payments now in the hope that you do not have to pay further arrangement fees or securing lower rates, both may be unlikely.

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