Jason Bailey

Expertly compared by Jason Bailey

Products Updated October 13, 2021

 

Mortgages for Loyal Customers

Loyalty mortgages are often preferential mortgages given to existing customers of the bank or building society. Using our mortgage comparison tools you can now compare the loyalty mortgages on offer against other lenders in the market. Search and see who is offering the best deals in an instant.

 

Free mortgage advice and brokerage service. Our experts can find you the perfect deal from thousands of products & exclusive deals:

Your home may be repossessed if you do not keep up repayments on your mortgage.

Results:1 providers expertly compared:

Lending Expert

Why?

This provider is our Expert’s Choice in its category as it won tops marks for the following.

  • TRUST
  • VALUE
  • EXPERTISE & KNOWLEDGE
  • CUSTOMER SERVICE

Learn more about how we review and assess the providers here on Lending Expert.

LTV
60% - 100%

Initial Rate
1.19% - 4.32%

Standard Rate (SVR)
3.94% - 4.79%

APRC
3.6%

Type
Variable & 3 ,5 & 10 Fixed Rate

Rated 4.9/ 5

All credit types

The mortgage experts at First Choice Finance can quickly assess your requirements and search the market place to find you the perfect mortgage deal. Click get a quote to make an enquiry today.

Read our customer and visitor reviews for this product:

Rating: 4 / 5 with 2 votes

Simple application process

by K Wheeler

Simple application process - broker was kind and offered advice.

Quick search

by James Hilton

This is a quick mortgage search facility and shows many lenders across the market. Impressed with the level of detail on each product.

Start Your Loyalty Mortgage Application Today With Lending Expert!

A loyalty mortgage is when clients of a bank are rewarded for their loyalty via discounted or incentivised mortgage rates. If the clients of a bank or building society already hold a current account, these existing customers may be offered a lower mortgage rate when taking out a mortgage with the same financial institution.

Not all banks and building societies offer mortgages, and you are under no obligation to take out a mortgage with your existing bank. It’s simply a way for lenders to encourage loyalty by offering lower rates for existing clients. It can be a win-win scenario as the lender benefits from client loyalty, and the consumers benefit from lower mortgage rates.

Lending Expert is a loyalty mortgage broker and can compare over 1,000 mortgage deals across the UK. Whilst high street banks will typically offer loyalty mortgages too, we can help find the best option for you with rates from 1.39% per month, whether you are looking for interest only, fixed, variable, tracker or have a bad credit history.

Start by clicking on ‘Check my Eligibility’ below and enter some basic details about you and your property – and Lending Expert will be able to help you find the best loyalty mortgage according to your requirements. 

 

Key Features

  • Potential discounted mortgage rates for existing bank or building society clients
  • Rates from 1.39% per month
  • Borrow up to £2 million
  • Loan Term – 1 to 25 years or upon request
  • Minimum 25% deposit
  • Interest only, fixed, tracker mortgages available
  • Free tool to compare loyalty mortgages

 

What Is Loyalty Tax?

‘Loyalty tax’, or ‘loyalty penalty’, specifically refers to the often unfair set-up for long-term clients who have always paid a certain interest rate whilst new customers are offered a lower interest rate. This lower rate is often used to incentivise new customers. Thus, the term comes from the relative cost paid by being loyal to your loan provider.

Loyalty mortgage is the term given to describe preferential mortgage prices for loyal clients. This means that if you take out a mortgage with your existing bank or building society, you may receive discounted rates for your mortgage.

According to data from the Citizens Advice, around 1.2 million borrowers contend with a loyalty penalty. First time buyers, older consumers and those on a low income were identified as the parties which were penalised the most.

The most common reason given was that people find the mortgage market too complex or time-consuming and, subsequently, find it difficult to shop around to seek out the best deal. 

 

What Areas of the UK Does Lending Expert Cover as a Loyalty Mortgage Broker?

We proudly offer loyalty mortgages across the entire UK, including Birmingham, Brighton, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Nottingham, Newcastle, Sheffield and more.

 

What Are the Benefits of a Loyalty Mortgage?

Existing clients can benefit from loyalty to their financial institution and from taking out multiple financial products with the same bank or building society.

It is cost-effective for banks and building societies to look after their existing client base as, by selling multiple products to one customer, they secure customer loyalty. They can offer discounted rates which incentivises existing customers and encourages loyalty. From their perspective, offering discounts is cheaper than spending money on campaigns to attract new clients.

Another benefit of a loyalty mortgage is that your existing financial institution will already know you as a customer and understand your financial capabilities. This can offer a more personalised approach. It also often means no new credit or affordability assessments which can be time-consuming and stressful.

In times of a fragile and volatile economy, staying with the same provider for all of your financial products may offer a great sense of security, stability and comfort, particularly if they are a well-known and reliable bank.

Additionally, depending on the deal, as a consumer you could benefit financially – be it through a better interest rate, discounted arrangement fee or smaller deposit.

 

What Are the Downsides of Taking Out a Loyalty Mortgage?

Not all loyalty deals are worth taking and it is worth assessing carefully the extent to which this would be a good deal for you.

It is important to remember that lenders incentivise mortgages for existing clients because it is cheaper for them to retain clients than to secure new ones; for this reason, it is in their best interests to lend you a home loan in addition to your existing accounts with them. Much of this is due to clerical reasons; with existing clients, they already have access to your financial information and loan track history.

It is also worth remembering that not all loyalty deals are competitive. Some may only be slightly better than the average market rates. Thus, it is always worth comparing different mortgage loan deals as you may be able to get a better deal from another provider as a new customer.

If you are considering changing your current account to the financial institution that serves as your loan provider, first think about how much hassle is involved. If the rates are not much better than your existing provider and it requires a lot of effort, it may not be the best course of action to take.

 

 

How Much Do You Save With a Loyalty Mortgage?

Your lender may offer you a better deal as an existing customer, but this does not guarantee that this is the most competitive offer on the market. ​​When deciding to go with the loyalty mortgage option, it is important to manage expectations and remain realistic.

Any deals offered to you by your existing lender is because they are trying to retain you as a customer. This means that you should not have unrealistic expectations about how much your loyalty will be rewarded. Like any financial institution, if you are ever unable to meet your mortgage payments, you will not be offered any preferential treatment.

 

Am I Eligible for a Loyalty Mortgage?

Before deciding to opt for a loyalty mortgage, you may need to meet the following criteria: 

  • It is up to 3 months before your current fixed rate mortgage deal is due to end
  • Your fixed rate has already terminated and you are on a variable reversion rate
  • You have a term variable rate and your early repayment charge period is due to end in the following 3 months
  • Good credit history

 

How Much Can I Borrow From a Loyalty Mortgage?

Speak to an expert today in order to find out how much you can borrow from a loyalty mortgage.

For loyalty mortgages, your repayment plan will need to allow for not just your mortgage payments, but also enough to cover any of your loyalty payments.

 

What To Consider Before Taking Out a Loyalty Mortgage

The most important thing to do before taking out a loyalty mortgage is to shop around; however, this can be extremely time-consuming and often complex. For that reason, working with a mortgage broker can simplify things and help you find the best deals on the market.

For those having doubts about whether this is the right type of mortgage for you, make an enquiry in order to speak to our team of expert advisors.

 

Who Are the Best Loyalty Mortgage Providers?

Any loyalty mortgage provider will need to be approved and regulated by the Financial Services Authority, whether they are one of the bigger name banks or the smaller, lesser-known lenders.

Household names such as Barclays, Halifax, Abbey and Virgin all offer their own specific loyalty schemes which will vary from lender to lender. For example, Halifax offers rewards for clients who pay £1,000 monthly into their current account which will allow them mortgage rates of around 0.2% cheaper than those offered to non-current account holders. 

Similarly, Barclays current account holders can benefit from discounts of up to 0.53% off selected mortgages.

Many lenders on the market offer competitive rates for loyalty mortgages. 

At Lending Expert, we compare the loyalty mortgage market in order to find the best provider to suit your needs. 

Rather than approaching the lenders directly and dealing with their in-house advisors, working with a mortgage broker will offer impartial advice to get you the best deal on the market.

 

How Do I Compare Loyalty Mortgage Rates?

Working with a mortgage broker such as Lending Expert will help you find the best mortgage to suit your circumstances without impacting your credit rating.

Contact us today to speak to an expert and start comparing loyalty mortgages to find the best option for you.

 

What Happens if I Do Not Keep Up With Repayments?

If one party of the loyalty mortgage is unable to meet their repayment for the month, the other party, or parties, will need to be able to afford to cover their payment.

Although it may seem like your loyalty is rewarded, ultimately if you are unable to keep up with repayments, your bank will treat you like any other customer.

 

Why Use Lending Expert As Your Loyalty Mortgage Broker?

Working with a number of high street banks and specialist mortgage lenders, Lending Expert has access to over 1,000 mortgage deals and is in the perfect position to help you get approved and get the best rates.

Our eligibility checker is completely free to use and can provide an indicative quote, with no obligation. 

Founded in 2013, we have years of experience working in the secured loan and mortgage market and have helped thousands of customers to date. Our values have always been to find the right product for the right individual at the competitive rate – and we are pleased to offer our services for you today!

FAQ

There are very few areas these days where you get a better deal for remaining with your current provider. From mobile phones to power suppliers, it rarely pays to stick with the same one from year to year with significant savings being available if you shop around and switch, or at least attempt to switch, providers on a regular basis.

The mortgage market is somewhat different to other markets because of the way funding is provided to lenders for them to be able to provide mortgages. There are costs associated with processing applications and each time a lender takes on a new customer they are also taking on a new risk. In order to help to reduce the amount of risk they take on, a number of lenders have begun to offer loyalty mortgages to their existing customers. These have been developed on the basis of lenders being able to retain customers who make their repayments on time and who represent a known risk to the lender.

There are a number of benefits that are provided by loyalty mortgages. The first thing to note is that the deals you can get with loyalty mortgages will almost always beat anything that is currently available on the open market. Some will provide you with decreased application fees, with discounts of up to half on some deals. This can be a significant saving before you even start looking at interest rates. Many loyalty mortgages will also provide you with special fixed rate deals that usually come in just under the rates available to everyone. The combination of the discounted application fees and the lower interest rate is enough to make these deals very attractive.

The main disadvantage of loyalty mortgages in the current economic climate is that they tend to offer a short term fixed rate mortgage over either two or three years. With interest rates set to start rising over the next year or so you could find yourself facing an unattractive mortgage market when your fixed rate period finishes.