Tesco Bank quietly entered the mortgage market back in 2014. I mentioned it briefly at the time but it turns out that I haven’t written about it for over four years.
(Part of the reason is that there are many factors to consider when taking out a mortgage. Whether or not you will earn Avios or Virgin Flying Club miles via Clubcard points should be very much at the bottom of your list of considerations!)
It is all very simple:
You earn 1 Tesco Clubcard point for every £4 of your monthly mortgage payment. This applies to both the capital and interest elements.
You earn 1 Tesco Clubcard point for every £4 of any overpayment you make, as long as it does not fully repay your mortgage
As a reminder, one Tesco Clubcard point converts into 2.4 Avios or 2.5 Virgin Flying Club miles. You can occasionally get a 10%-20% bonus on transfers to Virgin Atlantic, although Avios conversion bonuses are very rare.
This return would be pointless if the mortgages were badly priced. Tesco Bank has a good reputation although the need to compare interest rates, the fixed rate period, fees and maximum loan-to-value mean that there is no ‘one size fits all’ answer as to whether it is the best deal. At present it only appears to offer fixed rate mortgages covering two, three or five years.
If you were making monthly payments of £1000 you would be earning 250 Clubcard points. This is worth 600 Avios, so about £5-£6 of value. It is not enough to move the needle on which mortgage provider is cheapest. That said, Tesco does appear to have a competitive product and it is worth taking a look alongside other providers.
(Want to earn more Avios? Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)