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Should you get a mortgage from the supermarket?

Find out how deals from Sainsbury's, Tesco and M&S Bank compare to the big banks

You might be more likely to associate Sainsbury’s with margarine than mortgages – yet the the retailer’s home loan deals have become increasingly attractive.

Early last week, Sainsbury’s Bank cut interest rates for home movers and buy-to-let investors. And they’re not the only high street name helping people up the housing ladder, with Tesco Bank and M&S Bank also offering products for first-time buyers, home movers and remortgagers.

But should you really take out a mortgage from your supermarket? Here, we take a look at the new deals on offer from Sainsbury’s Bank and consider whether high street bands offer a competitive alternative to the big banks.

  • Whether you’re a first-time buyer or a seasoned property investor, you can get impartial, expert advice on your mortgage options by calling Which? Mortgage Advisers on 0800 2942 849.

Sainsbury’s Bank offers low-rate buy-to-let mortgage

Sainsbury’s Bank is the only lender run by a high-street supermarket that offers buy-to-let deals.

Last week, it lowered rates on its fixed-rate products at 60% and 75% loan-to-value. The deals, which come with £250 cashback, offer interest rates that stagger based on the fee you pay to take the mortgage out.

Our analysis of data from Moneyfacts shows the Sainsbury’s Bank products are very competitive – with the 1.7% two-year fixed-rate deal at 75% loan-to-value (with a fee of £1,995 and APRC of 4.65%) topping the initial rate charts.

The tables below show how the other products from Sainsbury’s Bank compare with the cheapest products (by initial rate) currently on the market:

Two-year fix at 60% loan-to-value:

Lender Initial rate Revert rate Fees APRC
Virgin Money 1.37% 4.99% £1,995 4.7%
Sainsbury’s Bank 1.45% 4.99% £1,995 4.8%

Five-year fix at 60% loan-to-value:
Lender Initial rate Revert rate Fees APRC
Sainsbury’s Bank 2.16% 4.99% £1,995 4.1%


Five-year fix at 75% loan-to-value:

Lender Initial rate Revert rate Fees APRC
Sainsbury’s Bank 2.52% 4.99% £1,995 4.3%
Post Office Money 2.54% 4.99% £995 4.2%

Best mortgage deals for home movers

If you’re looking to buy a home, Sainsbury’s Bank is joined by high street competitors Tesco Bank and M&S Bank in the residential market.

Fixed-rate deals at 75% loan-to-value

In the five-year fixed-rate mortgage market, Sainsbury’s Bank offers a joint table-topping deal of 1.94% – level with that on offer from HSBC.

For two-year deals, the gap between the cheapest of the three retail brands (Sainsbury’s) and the most expensive (Tesco Bank) is 0.25% – though this drops to just 0.15% when we look at five-year deals.

The table below shows how each brand compares against the cheapest deal (by initial rate) currently available, which is displayed by the blue bar.

Fixed-rate deals at 90% loan-to-value

Sainsbury’s Bank remains competitive in the 90% market, where the best initial rates are available from HSBC and First Direct.

But while M&S Bank was highly competitive at 75% loan-to-value, it’s the most expensive of the three brands for buyers with deposits of only 10%.

Is getting a mortgage with a supermarket any different?

The banks associated with supermarkets are the same as any other lender, and offer you the same protection as major lenders – and in some cases, cheaper deals than the biggest banks.

They’ve been around a long time too. M&S launched its financial services division in 1985 (though mortgages only arrived earlier this year) and both Sainsbury’s Bank and Tesco Bank launched in 1997.

Tesco Bank was originally launched alongside RBS, before being fully bought out by Tesco in 2008, while Sainsbury’s Bank was a joint venture with Bank of Scotland before Sainsbury’s took full ownership in 2014.

M&S Bank, however, has been operated by HSBC since 2004.


Where to find mortgage advice

If you need some advice on your mortgage options, you can get a free call back from an impartial, whole-of-market broker by filling out the form below.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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