The best 3 year fixed rate for a 20% deposit

Although 2 and 5 year fixed rates have nearly always reigned supreme, the market for 3 year fixed rates has become increasingly competitive in recent months, especially for borrowers with a 20% deposit who are unsure which option to choose.

The current best-buy 3 year fixed rate on the market is the latest release from Newcastle Building Society, now offering a 1.99% 3 year fix at 80% loan to value (LTV), available for buyers with a 20% deposit. This comes with an upfront £199 reservation fee and a £499 completion fee (which can alternatively be added to the loan), as well as an early redemption charge of 3% for remortgages. After 36 months the rate will then revert to the lender’s standard variable rate of 5.99%.

Offering a great choice for borrowers looking to secure lower monthly repayments, Newcastle’s latest deal is another example of the improving rates across the board, even for those with little equity in their property. Whereas 2 year fixes offer lower rates but limited security and 5 year fixes greater security yet higher rates, 3 year fixes can prove a beneficial balance for many.

This is not the only competitive 3 year fix currently available on the market, however, with HSBC also offering a new 3 year fixed rate at 2.04% up to 80% LTV. The deal comes with scheme fees of £1,172, yet costs approximately £614 more than Newcastle’s rate when counting the total spend over the 3 year period. Equally, for those with a higher 40% deposit, Co-operative Bank is now offering an even better 3 year fixed rate at 1.79% with a £1,499 fee.

Despite offering the current best 3 year fixed rate on the market, Newcastle Building Society isn’t the only lender expanding its fixed rate offers. Aldermore has now launched a limited edition 2 year fixed residential Owner Occupied product, at 3.38% up to 75% LTV, or 3.68% to 80% LTV. With a completion fee of £999, this is the lender’s lowest ever 2 year fix.1

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