MORE than 23,000 Tesco Bank mortgage borrowers will be moved to Halifax as the supermarket bank has confirmed plans to sell its mortgage arm.
The bank stopped offering mortgages to new borrowers in May when it first revealed plans to sell its loan book.
But now it says a deal has been agreed with Lloyds Banking Group, which Halifax is part of, for around £3.8billion.
It’s hoped the transfer will go through at the end of September and it will see Halifax take over the running and management of the loans.
Tesco Bank says it’s made the decision as it wants to focus on everyday banking.
The bank’s mortgage arm has a lending balance of around £3.7billion and it’s entirely made up of residential loans.
How to get the best mortgage deal
ONCE you’ve got your deposit together, you can start looking for a mortgage deal.
If you’re getting confused by all the deals on the market, it might be worth you speaking to a mortgage broker, which will help find the best mortgage for you.
A broker will typically cost between £300 and £400 but could help you save thousands over the course of your mortgage.
Money.co.uk has a list of top mortgage brokers that specilise in the specifics to suit your needs.
You’ll also have to decide on if you want a fixed-deal where the interest your charged is the same for the length of the deal or a variable mortgage, where the amount you pay can change depending on the Bank of England Base Rate.
David Hollingworth from London and Country Mortgages warns buyers not just to be swayed by the headline rate and to take into account product fees, which can typically be around £1,000.
He said: “It’s always important to shop around and have options.
“Paying a higher rate interest rate could still work out as better overall value than paying a chunky arrangement fees.”
Tesco Bank says it will write to customers to explain what’s happening, but here’s a round-up of what it means for you.
Will my rate change?
Fixed rate customers will see no change to their interest rate for the remainder of their term.
Tracker rates will continue to move in line with the Bank of England’s base rate until the transfer to Halifax takes place at which point it will be up to Halifax to decide whether this continues.
Standard variable rate (SVR) customers, meanwhile, will continue on Tesco Bank’s SVR until the transfer at which point it’s up to Halifax to decide what to do.
The Sun has asked Halifax for more information and we’ll update this story as soon as we know more.
Can I change my existing deal?
Yes, Tesco says until September 27 existing borrowers can still request changes including term amendments, product transfers, additional borrowing, porting, and payment holidays.
Will my mortgage application still be processed?
Any new mortgage application submitted before May 24 will continue to be processed, although Tesco Bank warns that the process must be completed by December 14.
Tesco Bank stopped accepting new application processes on May 24.
Alternatively, you can cancel your application by calling Tesco on 0345 217 2050. We’ve asked Tesco if you’ll incur any fees for doing this.
Can I still earn Clubcard points on my mortgage
If you’ve registered your Tesco Clubcard to your mortgage account and haven’t paid off your loan in full before September 27 2019, you’ll collect Clubcard points on mortgage repayments made until that date.
After that, you’ll no longer be able to earn Clubcard points on your mortgage.
But Tesco Bank says it will “gift” extra Clubcard points to borrowers when you move over as a “thank you” for being a customer.
How much you’ll get depends on what type of mortgage you had.
Fixed rate and tracker rate borrowers will be given points based on the number of points they would have earned by the end of their fix or tracker.
So if you’ve got a year left on your fix or tracker and you earn 125 Clubcard points on your repayments, you’ll get a one-off payment of 1,500 Clubcard points (12 x 125).
SVR borrowers, meanwhile, will be given a year’s worth of Clubcard points based on their monthly repayments.
For those with multiple components, such as a fix and tracker element, points will be based on when they both end.
For example, if you’ve got a year left on your fix and two years left on your tracker you’d get three year’s worth of Clubcard points based on your usual monthly repayments.
Why is Tesco Bank selling its mortgages?
Gerry Mallon, Tesco Bank chief executive, said: “In May we announced our decision to stop new mortgage lending while we explored our options to sell the mortgage book.
“Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term.
“As a result, we made the decision to move away from our mortgage offering. Our priority throughout has been to complete a commercially acceptable transaction with a purchaser that will continue to serve our customers well.
“After a thorough process, we are pleased to confirm that we have agreed the sale of our mortgage book to Lloyds Banking Group, operating under the Halifax brand.
“We are confident that they will continue to provide our customers with an excellent customer experience.”
Earlier this year, around 290,000 Tesco Bank current account customers saw the interest they earn on their current accounts slashed.
Last year, the lender was fined £16.4million for failing to protect customers during a cyber attack.
Meanwhile, new rules are going to make it easier to get the cheapest home loan deal.
We pay for your stories! Do you have a story for The Sun Online Money team? Email us at firstname.lastname@example.org