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Everything you need to know if you're comparing mortgage rates to find the cheapest deal - because sometimes the lowest rate isn’t best…
So you want to buy your first home, or you’re about to re-mortgage, and you want to find the best deal possible. After all, this is going to be one of your biggest monthly bills, so you want to know you’re paying as little interest as you have to.
But the rate depends on so many things – whether it’s a fixed or tracker mortgage, whether you have a large deposit or just 5%, whether your credit rating is good or not. So how do you genuinely compare mortgage rates?
1.Compare like for likeBarcroft USA Apples should be compared with apples only
Before you start comparing deals, make sure you know what you want. Do you want a tracker mortgage that goes up or down with the Bank of England’s base rate, or do you want the security of a fixed rate that won’t change for a set time?
Fixed rate deals are often higher than trackers, because you pay a little extra for the security of fixing your monthly cost. So decide what kind of mortgage is right for you and then you can compare like-for-like rates.
2.Work out your deposit There’s a big difference between the best rates available to someone with a 25% deposit and the best rates available to someone with just 5%. There’s no point comparing deals that you don’t qualify for, so make sure you are comparing rates that are relevant to you.
And if you have savings, don’t forget that you’ll need money for solicitors’ fees, property checks and moving costs – so work out what your deposit will be after you’ve spent that cash.
3.Check out the - real - best buy tables
Barcroft Media The Last Supper: one of three new sculptures by British sculptor Jason deCaires Taylor This table would be no use at all, for example
Some websites and brokers won’t show you all the mortgages on the market, just the ones they have deals with. Use a website that promises to show you all the products available. There’s a good list available via the Money Advice Service.
4.If you need help, get it Do you have a lot of debt? A poor credit history? Are you self-employed? All these things can affect your chances of qualifying for a mortgage, so it may not be worth comparing deals online.
Talk to a broker as they will be able to show you mortgages you are actually likely to qualify for. Just make sure you understand whether the broker is showing you all available mortgages or just the ones he or she has a deal with. You may need to pay a fee to get the right advice.
5.Use an online calculator
If maths wasn’t your favourite subject at school then don’t panic, there’s an easy way to compare mortgages. Many websites offer a calculator tool to help you work out the total cost.
You can use it to compare two different mortgages including any fees, but it also has an overpayment calculator, a tool for comparing fixed rate mortgages, a tool showing how much you can borrow and even a tab to show how much you’d save by overpaying.
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