How to get the cheapest Mortgage rates
Find out how to navigate the wild world of mortgages and get the best deals around.
Getting the right mortgage or remortgage deal can save you £100s each month. But it can be a nightmare knowing how to get it spot on – especially during these uncertain times – without the advice of a mortgage broker. To help navigate the mortgage maze, here's our step-by-step guide outlining how to find the best mortgage deal for you.
Now you're ready to get a mortgage, you need to go about it the right way. There are several things you need to do before you're ready to check out deals:
Step 1: Choose what type of mortgage
Have you decided whether you want a REPAYMENT or INTEREST-ONLY mortgage?
If you pick interest-only, you NEED a separate plan to pay off your debt, as your payments only cover the cost of the interest. A repayment mortgage, while it costs more each month, pays off the original debt too.
Unless you have a compelling reason, repayment is the way forward. It's also the one you're most likely to get as many lenders won't offer interest-only deals. Those that do will want evidence of a credible repayment plan and might limit the amount you can borrow.
Decide if you're going for a FIXED or VARIABLE rate mortgage
The most important thing to remember is with a fixed rate, you have the surety of knowing EXACTLY what your mortgage repayments will be for that time.
In years past, variable rates were often significantly cheaper but right now the pendulum has swung more towards fixed deals, although these too are now creeping up. But always pick the right deal for you.
Make sure you've got enough cash for any ASSOCIATED FEES
It's not just about the rate when picking a mortgage – a whole raft of fees could come as part of the package – stamp duty, solicitors' fees, valuation/survey costs, mortgage fees and more.
Put as much towards your deposit/equity as you can... especially if you're close to an LTV-RATE BOUNDARY
This may seem contrary to the point above, but mortgage rates drop in steps, known as loan-to-value (LTV) bands. So if you've a 9.75% deposit/equity, it's worth trying to get that up to 10% as you'll get a pick of lower interest rates.
If you've done all this, you're ready to follow the steps below to find the best mortgage for you. Remember that even if you've got an agreement in principle with a lender, you don't have to stick with it – especially if it is no longer offering the best deal.
Step 2: Get an idea of what you can get
Whether you're going for a fixed or variable mortgage, you need to start looking at what rates you can get. This will depend on the size of your deposit and the value of the property.
But, in starting your search for the best deal, the first thing you need to know is:
"NEVER just go to your bank for a cheap deal."
Your existing bank will only give you its tiny range of deals, not the array of alternatives, meaning it's highly unlikely you'll stumble across the best one for you.
Only check what it's offering as a starting point. Then check out this mortgage finder tool to see what else might be available.
Step 3: Talk to a mortgage broker
Once you've benchmarked a good rate from using the Mortgage tool, see if a broker can beat it.
They scour the market to find you a good mortgage deal. By using one, you swiftly cover a huge slew of lenders, and get added clout with them to ease your acceptance as well as an extra layer of protection if things go wrong.
Brokers will also be able to advise you on Help to Buy mortgages and other Government mortgage schemes (including shared ownership) if you're eligible – tell your broker upfront if that's what you're looking for.
Brokers are also worth their weight in gold, because they know key details about lenders' criteria. So they would know if the lender you're thinking of doesn't lend on properties above shops, or in council blocks – so they'd be able to recommend a different lender who does.
But the key is to find a broker you're comfortable with. The estate agents you meet when house hunting will often recommend a good broker. But you are not tied to using these, even if you buy via that estate agent.
Ask friends who've moved for recommendations, and search for online reviews – many local brokers are fantastic.
We’d suggest taking a look at The Mortgage Advice Bureau which we’ve personally found to be one of the best in the area, with fantastic reviews and lots of resources on their website.
Step 4: Check mortgage paperwork
You could start a library out of the amount of paperwork you get sent when you take out a mortgage or remortgage. The main documents you need to be aware of are:
1. Key Facts Illustration
The Key Facts Illustration does what it says on the tin. It gives you the Key Facts about the mortgage product, not all of them, but all the main ones. You should be given one of these before you make an application and you should check through carefully.
Questions to ask:
· Does it have the Key Facts logo on it? (shown above)
· Does it have the correct date on it?
· Does it have your name on it?
· Does it state who has created it? This will be your broker's details, or the lender if you've gone direct.
· Does it say if you've been recommended the product?
If all of the information's in there, file the illustration and keep it. If some of this information's missing, ask the lender or broker for a new one.
Why do you need to check and keep the illustration?
If you ever have a disagreement with your lender, this document is a crucial piece of evidence that proves what you were recommended, by who and when. Your lender won't keep a copy forever, so keep it somewhere safe as it could be years before you need it again. Scan it, file it, keep it!
2. The mortgage offer
Once you've successfully applied for a mortgage, you'll be sent a mortgage offer by the lender. This gives ALL the facts about the mortgage and the conditions on the loan that you are agreeing to.
It's a bit more reading, but it's massively important you read through it and check every detail is 100% accurate. If your name is not spelt correctly or the loan figure is wrong, this could stop the mortgage at the very last minute, resulting in delays, additional expense, jeopardising the purchase and even more scarily, losing the mortgage offer completely.
You also need to be sure there's nothing unexpected in it, particularly if it contradicts your Key Facts illustration. Pay particular close attention to fees, early repayment charges and the conditions you need to meet to complete (as it's your solicitor's job to check you've met these before the money can be drawn down).
Your broker should also check the mortgage offer, but don't rely on that. If you were to disagree on a point later down the line, it could be very difficult to win the argument if you've signed the document accepting the conditions.
Once that’s done, you’re on your journey towards a fantastic mortgage! If you need any advice on which broker to choose in Thanet, get in touch and we’ll happily recommend ones we’ve personally found to be the best on the market.
Because we play by the book we want to tell you that…
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
