Finding the best mortgage deal can be a frustrating time. With so many options and extras to look out for and compare it can all seem like too much. You may feel overwhelmed with stats and numbers which can put people off.
Many people just go for the lowest APR and interest rates which isn’t the best way to proceed. Lowest interest rates don’t always mean the best deal and lower repayment figures.
There are many other factors to look out for that make up the right mortgage deal for your needs.
Below is a brief outline of what you should be paying attention to and looking out for when you want to find the right mortgage deal for you. Mortgages can differ in many ways so the following info is what you should be looking out for.
Fixed Rate Mortgages:
A fixed rate mortgage offers you the same interest rate for a certain time period, usually between 2 to 5 years. These tend to be the most popular types of mortgages. Usually you get a good rate but when the period is over you may be given a higher rate. Usually when the higher rate kicks in you can remortgage.
A discount mortgage usually has an interest rate set below the lenders standard rate (SVR). So if there SVR is 5% you might have an interest rate 2% less. Always be aware lenders could change their SVR at any time which would affect your rate also. This means your payments could go up without much notice.
These types of mortgages are based on the Bank of England rate. So if the base rate is 1% your mortgage could be base rate plus 2%. These types of mortgages aren’t as popular now by lenders as the base rate from the Bank of England dropped to just 0.1%.
Standard Variable Rate Mortgages:
When any special offer or introductory rate period ends the SVR is the interest rate you go on then which is usually more expensive meaning higher monthly repayments. The SVR can change each month also and repayments can go up as well as down subject to the interest rate change.
Each lender could charge you a different arrangement fee, ranging from free to over £2,000. It’s important to find out straight away how much your potential lender will charge for this. You might be charged a percent of what you are borrowing so make sure you know all the details to begin with.
Any lender will conduct a valuation on the property before offering any mortgage deal. This could be chargeable to yourself though many lenders include these as part of the mortgage deal. Always check beforehand.
Many lenders will offer fee free mortgage deals or offer to add the costs to your mortgage, this does mean you will pay a hefty interest rate for what is essential a small amount compared to the mortgage itself. Be aware of fee free deals too as this could mean higher interest rates. This means long term you are going to pay more anyway so any savings at the start are quickly lost within the repayments.
Early Repayment Charges:
ERC’s are something you really do need to know before agreeing to any mortgage. There is a good chance at some point you will want to settle your mortgage early and early repayment charges could cost you thousands. In some cases they can be as much as 5% of your mortgage.
If you browse and compare mortgages online then you should see a section called APRC. This is the overall amount you would pay if you stayed with your lender for the full duration of your mortgage. Like a total cost so to speak. Normally most people don’t stay with the same lender and move around to get the best rates so whilst it’s useful information it’s not that important in reality.
Reputation & Reviews:
It’s worthwhile before agreeing any mortgage deal to research the company offering the mortgage. Look at reviews online and customer service feedback. This could tell you a lot about the company and may highlight or reveal issues other customers have been having. It’s always worth spending an hour just seeing how other peoples experiences have been with the lender you are considering.
Here at Mortgage Squared we are always happy to answer any questions you may have about the best mortgage deals. We understand that it can be frustrating and overwhelming to find the right deal for you.