Cash in on the best money deals in history!

Historically low interest rates are hitting savers hard. Yet if you're a borrower, you couldn't be in a better position right now.

18:16 24 February 2013

 

Over recent weeks, lenders have been launching increasingly competitive deals onto the market, making now the best time ever to apply for a loan, take out a mortgage or borrow on a credit card. Even everyday current accounts are well worth snapping up. 

 

Here, we round up exactly what's on offer. But don't hang about as you may never see rates as low as this again!

 

Personal loans

 

Personal loan rates have been sliding for some time now, but last month Clydesdale and Yorkshire banks increased the competition by cutting their costs to a representative annual percentage rate (APR) of 5.1%, the lowest levels since records began. 

Both Sainsbury's Bank and Derbyshire Building Society quickly followed suit, also re-pricing to 5.1% APR. 

 

But, as is typical of market-leading loan rates, the deals are only available for 'medium-sized' borrowing of between £7,500 and £15,000. You will also need to repay the loans over a period of between one and five years, with the exception of Sainsbury's Bank's offering which needs to be repaid between one and three years. You'll also need a Nectar card to qualify for the Sainsbury's loan.

 

To give you an idea of how much interest you would pay, if you borrowed the maximum £15,000 over three years, it would cost £1,181 in interest. 

 

Borrowing a smaller sum of £10,000 over three years would result in total interest payments of £787 and if you borrowed £7,500 over the same period, you'd pay just £590 in interest. 

 

Top tip!

 

As strange as it seems, in some cases, it works out cheaper to increase the amount you are borrowing in order to pay less interest. For example, if you borrowed £7,000 with peer-to-peer lender Zopa, you would pay a representative APR of 6.6%. Over five years, this would mean you'd pay £1,192 in interest. 

 

Yet borrowing £7,500 with Clydesdale Bank (or Yorkshire or Derbyshire) at 5.1% means you'd pay £989 over the same five-year period. 

 

Mortgages 

 

If you're buying your first home or moving house, now is a great time to get a mortgage, particularly if you can stump up a large deposit. 

 

The Funding for Lending Scheme (FLS), which provides cheap funds for banks to lend with, has provoked a flurry of activity on the mortgage market. And, this week, Chelsea Building Society launched the lowest ever fixed rate mortgage at just 1.89% for two years. On a mortgage of £160,000, that would mean paying £670 a month over a 25-year term. 

 

However, the mortgage is only available to those with a large deposit of 40% and it also comes with a hefty arrangement fee of £1,695. The move knocked HSBC's two-year fixed rate deal at 1.98% (with a £1,999 fee) off the top spot.

 

If you'd prefer to fix for longer, first direct is now offering the lowest ever five-year fixed rate mortgage at 2.69% with a £1,999 fee. You'll need a deposit of 35% and you can find out more in Laura Howard's article.

 

Yet even if you have a smaller deposit, you can still get your hands on some very competitive deals. If you have a deposit of 10%, for example, Chelsea Building Society is offering a two-year fixed rate mortgage at 3.69%. It has a fee of £1,695. 

 

Top tip!

 

It can sometimes work out cheaper to choose a higher mortgage rate if it has a lower fee attached. 

 

For example, if you had a mortgage of £160,000, and chose HSBC's two-year fixed rate of 1.98%, you'd pay £16,248 over the two years, based on a 25-year term on a repayment basis. When you factor in the cost of the £1,999 fee, this rises to £18,247. 

 

But HSBC also offers another two-year fixed rate deal for those with a 40% deposit. It comes with a higher rate of 2.39% but has a lower fee of £799. On a £160,000 mortgage, you'd pay £17,016 over two years. When the fee is included, this rises to £17,815 - that's £432 less than the 1.98% deal. 

 

Credit cards

 

If you have debt leftover from Christmas sitting on a credit card that's charging you interest, transferring it to a 0% balance transfer credit card is a no-brainer. And right now, the Barclaycard Platinum Credit Card with Extended Balance Transfer is offering the longest ever 0% balance transfer offer at 25 months.

 

This means you'll have more than two years to clear your debt without worrying about paying any interest. Just be aware there is a 3.2% transfer fee. On a debt of £5,000, that works out to be £160. But don't let this put you off as this is likely to be a lot less than if you left your debt where it was. 

 

Top tip!

 

If you need longer than two years to clear your card debt, consider moving your balance to a low APR credit card as these tend to offer longer deals, sometimes for the life of the debt. 

 

For example, the Barclaycard Low Rate credit card has a representative APR of 4.9% for 36 months and the bonus is there is no transfer fee. 

 

Alternatively, the MBNA Rate for Life card offers a slightly higher APR of 5.9% but you will receive this rate until you've cleared your balance in full. There is a transfer fee of 1.5%. 

 

Current accounts

 

If you're paying sky-high fees on your overdraft, Halifax is currently offering new customers a 12-month fee-free overdraft on its Reward Current Account. You will also receive £100 for switching.

 

Even if you stay in the black you'll benefit as, providing you pay in £1,000 or more each month, you'll receive a £5 monthly reward. But watch out as changes to the account will come into force on May 1. Find out more here. 

 

If you regularly stay in credit, another option is Santander's 123 current account. Providing you pay in £1,000 or more each month, you'll receive interest on your balance. How much interest you receive depends on the amount in the account - as outlined below:

 

•1.00% AER on balances between £1,000 and £1,999.99 

 

•2.00% AER on balances between £2,000 and £2,999.99 

 

•3.00% AER on balances over £3,000 (up to a maximum of £20,000). 

 

With savings rates getting lower, it can therefore make more sense to house your savings in your current account. To find out more read this article from our editor in chief, Clare Francis. 

 

The Santander account also offers cashback of between 1.00% and 3.00% on certain direct debit payments. Just be aware there is a £2 monthly fee on the account. 

 

Top tip!

 

From September, switching current accounts is set to become much easier and will take a maximum of seven working days. Read Mark Hooson's article for more information.

 

Please note: Any rates or deals mentioned in this article were available at the time of writing.