Best Methods to Find Out Cheap Mortgage
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.
To help you navigate through the mortgage maze, here's our guide outlining step-by-step how you can find the best possible mortgage deal for you.
Step 1: Know what type of mortgage you want
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:
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 is also the one you're most likely to get as some lenders just won't offer interest only mortgages. Those that do will want evidence of a credible repayment plan and might limit the amount you can borrow.
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, which are at their cheapest ever. But always pick the right deal for you - our What type of mortgage should I get? guide has more information on how to choose.
Make sure you've got enough cash for any associated fees.
It's no longer 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. Our How much will buying a home cost? guide will give you the full information on what you'll need to pay and when.
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 a rough 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 use a broker or mortgage comparison site to check the whole market.
The web is a powerhouse for benchmarking a good deal. Use these comparison services to find what's available with your deposit and intended property value
Step 3: Can a mortgage broker beat it?
You've benchmarked a good rate from the comparison tables, now 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 (NewBuy, shared ownership and more) if you're eligible - tell your broker upfront if that's what you're looking for.
Ask friends who've moved for recommendations - many local brokers are fantastic. The aim's to find you the best broker for the lowest possible price.
But not all brokers are the same. Some are limited in what they can offer you, so there are three crucial questions to ask.
To help you navigate through the mortgage maze, here's our guide outlining step-by-step how you can find the best possible mortgage deal for you.
Step 1: Know what type of mortgage you want
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:
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 is also the one you're most likely to get as some lenders just won't offer interest only mortgages. 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, which are at their cheapest ever. But always pick the right deal for you - our What type of mortgage should I get? guide has more information on how to choose.
Make sure you've got enough cash for any associated fees.
It's no longer 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. Our How much will buying a home cost? guide will give you the full information on what you'll need to pay and when.
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 a rough 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 use a broker or mortgage comparison site to check the whole market.
The web is a powerhouse for benchmarking a good deal. Use these comparison services to find what's available with your deposit and intended property value
Step 3: Can a mortgage broker beat it?
You've benchmarked a good rate from the comparison tables, now 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 (NewBuy, shared ownership and more) if you're eligible - tell your broker upfront if that's what you're looking for.
The key is to find a broker you're comfortable with. The estate agents you meet when house hunting will often recommend brokers. They may even work from the same office. But you are NOT tied to using these, even if you buy via that estate agent.
Ask friends who've moved for recommendations - many local brokers are fantastic. The aim's to find you the best broker for the lowest possible price.
But not all brokers are the same. Some are limited in what they can offer you, so there are three crucial questions to ask.
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