Best Fixed rates remortgage Deals

The AA, best known for rescuing motorists whose cars won’t start, is to offer fee-free mortgages to its breakdown cover customers.

Following a tie-up with the Bank of Ireland, which already supplies mortgages for the Post Office, the AA has launched a range of fixed-rate loans mostly aimed at existing homeowners looking to move to their mortgage to a cheaper deal.

The company, which was listed on the stock exchange by its private equity owner in 2014, is initially offering five deals, all fixed for between two and five years. Borrowers will be offered loans of up to 90% of their home’s value, with the rates ranging between 2.08% and 3.78%.

Mortgage experts said only the four-year deal at 2.48% could be termed a best buy, but the lack of fees meant the products would appeal only to those looking to switch a small mortgage.

The AA’s home emergency and central heating emergency and repair cover are included in the package free for 12 months. Members will also receive a 15% discount on AA home insurance, but will have to buy breakdown cover if they do not already have it.

Michael Johnson, director of financial services at the AA, said: “Lots of people are on mortgage deals where they are spending far more than they need to. This could be down to a combination of high fees and a lack of information stopping them from switching to a better deal. We want to help our members by removing hidden costs and providing simple, straightforward mortgages, with all standard upfront fees included.”

He added that building on the firm’s motoring heritage, the company would offer members a “mortgage MOT” service, which gave them the chance to see if the AA could save them money.

However, Rachel Springall, of financial analyst Moneyfacts, said the AA had entered the mortgage market in the midst of a fiercely competitive price war.

“It’s great to see extra competition on the market and the fact these deals charge no product fee will be appealing to borrowers looking to keep upfront costs down, ” she said. “Unfortunately, some of the rates are not as appealing as it seems, particularly if borrowers have a large loan.”

David Hollingworth, of mortgage broker London & Country, agreed that for many borrowers there would be cheaper deals in the market.

“The AA is offering no-fee products with free valuation and legal work for remortgage – these look most likely to appeal to those looking to review their current deal, especially those with smaller mortgages looking to switch, ” Hollingworth said. “Most lenders will offer a range of rate/fee combinations so it’s important for borrowers to consider the best overall value rather than focus on rate or fee alone.”

The mortgage launch comes a year after the AA announced its partnership with Bank of Ireland’s UK division, and adds mortgages to credit cards, savings accounts, cash Isas and personal loans. It first began offering savings products in 2004 before the business was sold by then owner Centrica.