Tesco Bank sells 23,000 mortgage loans to Halifax – what it means for customers
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.
Websites such as and have mortgage sections so you can compare costs and all the banks and building societies have their offers available on their sites too.
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.
You can also get advice from some mortgage brokers for free, such as or .
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 in the meantime, 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 and Halifax says this will still be the case when customers are moved across for the remainder of their term.
Standard variable rate (SVR) customers, meanwhile, will continue on Tesco Bank's SVR - they'll only move to Halifax's SVR if they change their mortgage.
Halifax's current SVR is 4.24 per cent while Tesco Bank's is 4.04 per cent.
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.
Do I need to change my repayments?
Halifax says customers don't need to change any standing orders or payment details linked to their mortgage for now - you should continue to make repayments as normal.
It adds that it will notify customers if any changes need to be made in future.
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 applications 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 and we'll update this story when we hear back.
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 repayments.
Currently, mortgage customers receive one Clubcard point for every £4 they repay each month. Once you have 150 points that nets you a £1.50 voucher to spend in Tesco.
But Tesco Bank says it will "gift" extra Clubcard points to borrowers as a "thank you" for being customers.
How much you'll get depends on what type of mortgage you have.
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 monthly 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.
You’ll see these Clubcard points appear on your quarterly Clubcard statement in November 2019.
If you’re still going through the application process after September 27, you’ll see your Clubcard points appear on your February 2020 Clubcard statement.
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.”
More on mortgages
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.
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