Tesco Bank shocked the mortgage world this week by announcing that they were going to stop mortgage lending.
September 2019 update
Tesco announced in September 2019, after this original article was published, that they will be selling their mortgage portfolio to Halifax.
If you’re a Tesco mortgage customer and wasn’t aware of the news, there will be a letter in the post to you as we speak.
Tesco have admitted that they are exploring options to sell its existing mortgage portfolio, including the complete transfer of related balances and ongoing administration of relevant accounts. This will no doubt happen in due course, but other than a name change, the impact should be minimal for their existing customers.
The reason that you may not have heard it discussed more is that very little will change. Existing Tesco Bank mortgage customers will continue to hold their mortgage with Tesco on the terms they signed up to, though it’s good to note that the official press release has a line which reads “If a transaction is confirmed, Tesco Bank will notify existing customers to explain what the sale means for their account.”
Comments from Tesco Bank
Tesco Bank Chief executive, Gerry Mallon, said: “We have made the strategic decision to focus on serving a broader range of customers in more specific areas, which means moving away from our mortgage offer.
To that end, we have made the strategic decision to focus on serving a broader range of customers in more specific areas, which means moving away from our mortgage offer.
We have therefore chosen to cease lending to new customers and announce our intention to explore a sale of our portfolio.”
What will happen with my Tesco mortgage application?
For those that have applications going through with Tesco at the moment, the bank have said that they will still be honouring any applications put in before a certain date.
Assuming that they have received the correct paperwork in, and that it passes underwriting, this shouldn’t cause any problems, though it will need to reach formal mortgage offer by 14th June and complete within the six month offer period. If you’ve used a broker to apply for the mortgage, your broker should be in touch with an update soon.
For those that were eyeing up a potential application with the company, you could still get your application in, but you only have a day or two to do so. Any applications need to be submitted by midnight this Friday, 24th May.
In reality, there will most likely be other lenders that offer similar or better products without the threat of stopping lending in a couple of weeks.
It marks the end of seven years of lending for Tesco Bank, who have offered mortgages since 2012. They currently serve over 23,000 customers with total lending balances of £3.7bn.
If you have any questions or queries as to how this could affect you or your ability to get a mortgage, feel free to give Dan The Mortgage Man a call on 07837 820 894.
I already have a Tesco mortgage – What happens now?
If you are an existing Tesco customer and have a mortgage in place, nothing will change for you. When your Tesco mortgage is up for review (normally at the end of a fixed-rate period), you’ll want to look at remortgaging.
Thanks to the FCA’s new rules around mortgage prisoners, you may also be able to change your mortgage even if Tesco won’t offer you a new deal.
If you have missed out on applying for a Tesco mortgage or are looking to improve the mortgage you have and want advice on the best mortgage available to you, contact Dan The Mortgage Man now.
Contact Dan The Mortgage Man
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