M&S offers mortgages for the first time 

M&S Bank is offering mortgages for the first time, having just launched a range of competitive deals – including several designed to help first-time buyers.

Would-be homeowners with a 10 per cent deposit can secure a two-year fixed rate of 2.09 per cent with a £995 fee from the bank and receive £1,000 cashback on completion. 

On a £180,000 mortgage taken over a 30-year term, this means monthly repayments are just £673. 

Sue Fox, chief executive of M&S Bank, said: ‘The launch of our mortgage range is a major milestone for us and I’m delighted that customers will now be able to get the service they have come to know and expect from M&S Bank.’  

What is M&S Bank offering?   

M&S Bank has launched a number of different mortgage deals including two-year and five-year fixed rates for first-time buyers, home movers and remortgages.

Two-year tracker rates are also available and start from 1.39 per cent for a 60 per cent loan-to-value mortgage. Monthly repayments on a £180,000 mortgage at this rate would be £612 – unless the base rate was to rise.

First-time buyers with a 10 per cent deposit wanting to lock in for longer than two years can also secure a five-year fixed rate of 2.59 per cent with a £995 fee, £1,000 cashback and a free valuation. Monthly repayments on the same loan as above would be £720.

The challenger bank is also offering a range of deals for those looking to move house and remortgage. Two-year fixed rates start from as low as 1.49 per cent for those with a 40 per cent deposit or equity paying a £995 fee, while five-year fixed rates on the same terms start at 1.99 per cent. 

There are fee-free options available, though the rates are a little higher and M&S Bank is allowing borrowers to take their mortgage over a maximum term of 30 years, helping to ease affordability constraints and bring down monthly payments.

Watch out though, the longer you are paying off your mortgage, the more interest you’ll pay so it’s better to keep the term as short as you can afford to. 

To further support those purchasing their first home, M&S Bank will allow up to four borrowers who will live in the property to take out a mortgage together.

Fox said: ‘This feature is ideal for a group of friends or siblings who want to realise their dream of home ownership, but perhaps wouldn’t be able to do so alone. 

‘As well as first-time buyers, this feature can be used across M&S Bank’s product range by home movers and those remortgaging.’

Customers remortgaging with M&S Bank have the option to consider additional borrowing at the same rate and term as their M&S Bank mortgage. 

This would give them a lump sum which can be gifted to a loved one to use towards a house deposit. 

Customers remortgaging to M&S Bank from another provider will also benefit from fee assisted legal service, which covers the cost of the standard legal work required to remortgage from another lender.

M&S Bank has also revealed that it will donate £25 to housing and homelessness charity Shelter for every mortgage purchased.

M&S Bank already offers several best buy deals on its popular current account and credit card

How do the deals compare? 

After launching in 2012, M&S Bank has regularly been voted one of the UK’s best banks for customer service and holds Which? Recommended Provider status for its current account offering.

While its mortgage rates are competitive, they’re not the cheapest available on the market. 

First-time buyers with a 10 per cent deposit could get a two-year fixed rate from Yorkshire Building Society at 1.82 per cent with a £950 fee, which comes with £250 cashback. Monthly repayments on this deal are £647 – saving £26 a month compared to the M&S deal. 

That said, the YBS offer comes with just £250 cashback compared to the much more generous £1,000 from M&S Bank. 

To see how cashback and fees affect the overall cost of your mortgage, use our true cost calculator and read more on cashback mortgages here. 

M&S Bank mortgages are available directly from M&S Bank and also through mortgage broker London & Country. 

The bank said it plans to offer its deals through other mortgage brokers later this year. 

This is Money verdict

Having featured consistently towards the top of the best buy tables with personal loan and credit card products for many years, it appears M&S Bank is following a similar strategy with its mortgages.  

Research by Moneycomms.co.uk – commissioned by M&S Bank – suggests the bank’s two-year fixed rate 90 per cent LTV first-time buyer mortgage ranks either first or second most competitive in the market across a range of mortgages up to £250,00.

The combination of a competitive rate, fee and a market-leading £1,000 cashback should make M&S Bank a popular choice for those looking to buy their first home.

Andrew Hagger, of Moneycomms.co.uk, said: ‘It’s good to see some extra competition in the residential mortgage space from one of the UK’s biggest brand names – hopefully it will put pressure on other players to keep pricing low.

‘As with similar forays into mortgages by supermarket banks, Tesco and Sainsbury’s, based on these initial products it looks as if M&S Bank will give established lenders something to think about.’

Hagger’s analysis suggests that on a £180,000 mortgage taken over 30 years, the net outlay with an M&S Bank 90 per cent loan-to-value two-year fix is £16,147 over the initial 24 months.

‘This is £692 cheaper than Barclays, £1,840 cheaper than NatWest and £2,920 less than Lloyds Bank,’ he said.

‘It’s still early days, but if these rates are a sign of things to come then it can only be positive for cost-conscious borrowers.’