Tesco Home Loans: What UK Borrowers Need to Know

Tesco Home Loans: A Comprehensive Overview

Finding the right mortgage is one of the most significant financial decisions for UK homeowners. While Tesco Bank previously offered home loans, the landscape has changed. Here, we demystify what Tesco Home Loans were, their features, and what alternatives are available today, helping you make informed choices in a shifting market.

Who Should Read This?

This guide is tailored for UK consumers seeking reliable information about Tesco Home Loans—whether you’re a first-time buyer, remortgaging, or simply considering your options for financing a property.

Key Concepts and Terminology

• Home Loan / Mortgage: A loan used to purchase or refinance a property, typically repaid over 25 years or more.

• Fixed Rate: An interest rate that stays the same for a set period, often two to five years.

• Variable Rate: A rate that moves in line with the lender’s standard variable rate or the Bank of England’s base rate.

• Loan-to-Value (LTV): The percentage of your property’s value you borrow. E.g., an 80% LTV means you borrow 80% of the home’s value.

• Remortgaging: Switching your existing mortgage to a new deal, either with your current lender or a new one.

Tesco Bank previously provided mortgages, including fixed and tracker rates, with competitive fees and flexible repayment options. However, Tesco Bank stopped offering new home loans in 2019. Existing customers remain supported, but new applicants must seek alternatives.

Options for Tesco Home Loan Customers

If you have a Tesco mortgage, you can continue your current arrangement or remortgage elsewhere when your deal ends. For those seeking new home loans, Tesco is no longer an option, but the UK market remains competitive. Consider:

• High Street Banks: Barclays, Lloyds, NatWest, and HSBC offer a variety of mortgage products.

• Building Societies: Nationwide, Yorkshire, and Coventry Building Society are known for flexible lending criteria.

• Specialist Lenders: Aldermore, Metro Bank, and others cater to unique circumstances like self-employment or poor credit.

• Mortgage Brokers: A broker (such as Kandoo) can help you compare products across the market and find the most suitable deal.

Costs, Impact, Returns, and Risks

• Interest Rates: The core cost of your mortgage. Small differences can add up over decades.

• Fees: Arrangement, valuation, and legal fees may apply. Always check the total cost, not just the rate.

• Early Repayment Charges: Some deals include penalties for paying off your mortgage early.

• Impact on Credit: Regular repayments improve your credit score, but missed payments can have long-term repercussions.

• Property Value Fluctuations: Negative equity can occur if house prices fall.

Eligibility, Requirements, and Conditions

While Tesco no longer accepts new mortgage applications, general eligibility for UK home loans includes:

• Minimum age (typically 18+)

• Sufficient income and employment history

• Good credit score

• Proof of identity and address

• Deposit (usually 5% or more of property value)

Each lender sets its own criteria, so requirements can vary.

How the Mortgage Process Works: Step-by-Step

1. Assess your financial position

2. Research available mortgage products

3. Obtain an Agreement in Principle (AIP)

4. Submit a full mortgage application

5. Provide documentation (ID, income, etc.)

6. Property valuation arranged by lender

7. Receive a formal mortgage offer

8. Complete legal work and exchange contracts

Pros, Cons, and Considerations

Pros:

• Potential to secure your own home

• Fixed rates offer payment certainty

• Variety of lenders and products

Cons:

• Large financial commitment

• Interest and fees can be significant over time

• Risk of negative equity

Consider your long-term financial stability and ability to cope with rate rises or life changes before committing.

Before You Decide: Key Considerations

• Exit Fees: Check for early repayment or exit fees with your existing lender.

• Flexibility: Some mortgages allow overpayments or payment holidays—useful if your circumstances change.

• Total Cost: Don’t focus solely on headline rates; calculate the overall cost for the full term.

• Professional Advice: Engaging a mortgage broker can help you navigate complex choices.

Alternatives to Tesco Home Loans

With Tesco no longer in the market, consider:

• Other Banks and Building Societies: Many offer competitive deals for both new buyers and remortgagers.

• Help to Buy Schemes: For first-time buyers, government-backed schemes provide support with deposits.

• Shared Ownership: Buy a share of a property and pay rent on the rest.

• Credit Unions: Some offer competitive rates for specific circumstances.

Frequently Asked Questions

1. Can I still get a Tesco mortgage?
No. Tesco Bank withdrew from new mortgage lending in 2019. Existing customers are still supported.

2. What happens when my Tesco mortgage deal ends?
You can remain on Tesco’s standard variable rate or remortgage with another lender.

3. Are there fees to exit my Tesco mortgage early?
Early repayment charges may apply. Check your mortgage offer for details.

4. How do I remortgage if Tesco isn’t accepting new applications?
You can apply to other lenders or seek advice from a mortgage broker.

5. Do I need a broker to switch mortgages?
While not required, a broker can simplify the process and find the best deals.

6. What documents are required for a mortgage application?
Typically, proof of income, bank statements, ID, and evidence of deposit.

What to Do Next

Review your existing Tesco mortgage terms. If your deal is ending, start comparing alternatives at least three months in advance. Consider speaking with a mortgage broker to explore the full market and secure a deal in line with your needs.

Disclaimer

This article is for informational purposes only and does not constitute financial advice. Please consult a qualified mortgage adviser or financial professional before making any decisions regarding your home loan or remortgage options.