Are Tesco's market-leading mortgages best value?

Tesco Bank has launched a set of mortgages, some with the joint lowest rates, but they are not necessarily the best bet for borrowers.

The financial arm of the supermarket giant has launched a two-year fixed mortgage at 1.74% with a �1,495 fee for those with a 40% deposit.

It has also launched a five-year fix at 2.49 per cent, also with a �1,495 fee for those with a 40% deposit (see our Cheap Mortgage Finding guide and our Mortgage Calculator for help on getting the best deal).

However, other mortgages can be better value for homeowners.

For example, broker London & Country Mortgages picked out Norwich & Peterborough's two-year fix at a higher 2.24% but with a lower �295 fee.

On the Tesco two-year deal, someone borrowing a typical �150,000 paying the fee upfront would pay �16,300 over the term, but a lower �15,970 with N&P.;

Meanwhile, looking at five-year fixes, First Direct offers 2.69% with a �499 fee for someone with a 35% deposit.

Over the term on a �150,000 mortgage with the fee paid upfront, Tesco costs �41,815 and First Direct �41,719.

Guy Anker, MoneySavingExpert.com news editor, says: "These examples show the importance of factoring in the fee and rate when choosing a mortgage.

"And given the complexities of the market, unless you're super savvy, seek advice from a whole of market mortgage broker."

James Cotton, from London and Country, says: "The two and five years rates are definitely up there. In terms of rate, they're both market-leading at the moment, tied with a couple of others, but the fee is pretty high."

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