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Amid changing market conditions, mortgage lenders are introducing flexible deals to give borrowers options as interest rates normalise. Among these are 1-year fixed-rate mortgages, but how difficult are they to get, should you choose one, and where can you get advice about them? Read on to find out…
Can you get a 1-year fixed-rate mortgage in the UK?
Yes. They have always been rare as the shortest fixed-rate mortgage deals most lenders offer come with introductory rates periods of two years. Under the current market conditions, however, a few mortgage providers have added 1-year fixes to their product ranges.
The idea behind the introduction of 1-year fixed rate mortgages is that borrowers who need to remortgage can lock themselves into a short-term deal while interest rates are changing, in the hope that, 12 months down the line, significantly lower rates could be available.
At the time of writing (December 2024), mortgage rates are still in flux following a long period of volatility which began in September 2022 with the UK Government’s Mini Budget.
A 1-year fixed-rate mortgage could tide you over and help you secure a better deal in the long run, but it’s important to seek professional advice before entering one of these agreements.
What is the criteria for a 1-year fixed-rate mortgage?
In the majority of cases you will need to be an existing customer of a lender who is offering 1-year fixed mortgages, as these deals are not usually available to new borrowers.
The other requirements for these mortgages are no different to any other type of residential mortgage, and can be found summarised below:
- LTV requirements: The small number of 1-year fixed-rate mortgages currently available have loan-to-value (LTV) requirements of around 60-75%, meaning you would need to hold equity of between 24% and 40% to qualify for one of these deals.
- Credit history: It can be more difficult to get approved if you have bad credit that is considered severe or recent - read more about bad credit mortgages here.
- Age: Your chances of securing a 1-year fixed-rate mortgage might be slimmer if you will be aged 75-85 during the term - read more about mortgages for older borrowers here.
- Property type: Seeking professional advice is recommended if your property has any ‘non-standard’ construction or features - you can read more on this here.
If you think you won’t qualify for a 1-year fixed-rate mortgage, either because your current lender doesn’t offer them, or you don’t fit the criteria, it’s a good idea to speak to a mortgage broker to go over your options - there are other flexible products that could fit your needs.
Which lenders offer 1-year fixed-rate mortgages?
At the time of writing (December 2024), only a minority of lenders are offering 1-year fixed-rate residential mortgages to their customers. These mortgage providers include Barclays (existing customers only) and Precise Mortgages, but it may be possible to find more through a broker.
Furthermore, Halifax recently launched a mortgage with a slightly longer fixed rate period of 1.5 years. This deal also comes with £250 cashback but borrowers are required to find their own solicitor.
Whole-of-market brokers, like the advisors at Teito, often have access to exclusive rates and deals for their customers, some of which may include 1-year fixes. Moreover, new products are entering the market all the time, and our brokers will be alerted to their launch immediately.
Are any lenders offering this for buy-to-let mortgages?
Yes. A small minority of buy-to-let mortgage providers are now offering short-term fixed rate mortgages for landlords who want to bide their time while rates are in flux. This includes 1-year fixed-rate deals from lenders including Nationwide, who currently have products aimed at new borrowers making purchase applications, as well as existing remortgage customers.
How to get a one-year fixed-rate mortgage
Follow the steps below to start your search for a one-year fixed-rate mortgage the right way:
Speak to a mortgage broker: This would be the best place to get started as a broker can tell you whether a 1-year fixed-rate mortgage is a realistic proposition for you, and if not, go through every possible alternative and help you choose the right one.
Research the market: It’s a good idea to find out what kind of rates are available on 2-year fixed rate mortgages as well as tracker agreements and compare them to the kind of deal you would qualify for on a one-year fix. Other short-term options might fit your requirements, and you can compare them for free through Teito.
Get started: You can begin your journey below. Choose your preferred option to get started on your mortgage journey...
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What interest rate to expect
The limited number of one-year fixed mortgages available come with similar rates to equivalent products with two-year introductory rates periods. For example, earlier this year, one mainstream lender was offering a one-year fix with 80% LTV and an introductory rate of 4.15%, and a two-year fix with exactly the same initial rate.
Alternatives to consider
There are a number of alternatives you could consider if you don’t qualify for a 1-year fixed-rate mortgage but don’t want to lock into an agreement for the long haul.
Some back-up options to discuss with your mortgage broker include:
Other short-term fixed-rate mortgages
With access to the entire market through a mortgage broker, you may be able to find a fixed-rate mortgage with an initial rates period of 18-24 months that fits your needs. With the right lender, it could also be possible to take out one of these deals on a flexible basis, with minimal or no early repayment charges to foot if you were to switch to another product down the line.
Flexible tracker mortgages
Tracker mortgages typically come with relatively short initial rates periods, with most requiring a two-year commitment. The good news for anyone looking for a short term solution is that some lenders have introduced flexible versions of these products which allow tracker mortgage customers to switch to a fixed-rate mortgage with no early repayment charges.
Temporarily switch to your lender’s SVR
This is not an option that should be taken lightly as mortgage lenders’ standard variable rate (SVR) is usually significantly higher than the initial rates period of a fixed-rate or tracker mortgage, but some borrowers consider it if they don’t want to lock into a deal in the short term, or they need flexibile features such as the option to make uncapped overpayments.
Be sure to talk this through with a mortgage broker before considering moving onto your lender’s SVR as a potential stepping stone to a new deal down the road.
Why choose Teito for your mortgage needs?
You can compare fixed-rate mortgage deals from across the market for free with Teito and access support from a broker who specialises in securing short-term fixed-rate deals.
Here are just some of the reasons our customers choose us for their mortgage:
- Exclusive rates and deals are available
- Our brokers are whole-of-market specialists
- We are five-star rated on leading review websites
- It takes minutes to secure an agreement in principle online
Ready to source a fixed-rate mortgage and take advantage of a free, no-obligation chat with a mortgage specialist? Get started here.
FAQs
When your introductory rates period ends after 12 months, you will be switched onto your lender’s standard variable rate (SVR), unless you agree to fix back in with them or remortgage with a new lender. Most lenders contact their customers around six months in advance to prompt them to fix back in, but you can always enquire about this in advance.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.