How To Find The Best Mortgage Deals In The UK

Buying a house is a complicated process with lots of moving parts to organise.  One of the big parts is the mortgage for the new house and mortgages themselves come in many shapes and types.  So how do you find the best mortgage deal in the UK?

Look at the interest rate

Interest rate is probably one of the main factors to use to compare different mortgage products.  Even a small difference in the rate can make a big difference to how much you pay over the life of the mortgage and even to the monthly payments that you need to make.

While the actual figure is important, it is also worth understanding the different types of interest rates and what these mean.  Here are the four main types:

• Fixed-rate – this means the rate of interest won’t change for a set period of time which can be anywhere from two to ten years
• Discount mortgages – these have a rate at a certain percentage below the standard variable rate for a set period, but these can be changed at any point by the lender
• Tracker mortgages – these are usually a certain percentage above the Bank of England interest rate and can vary
• Standard variable rate – these start when a fixed rate or other deal ends and can vary on a monthly basis. They are also usually higher than other rates
• Many people go straight to their own bank to start the search for a mortgage and while they may offer the best rate, it is unusual. In fact, often it is building societies that offer the best deals for mortgages rather than the high street banks. So when you start looking at those interest rates, compare for a range of providers including building societies as well as the bank that you deal with for your day to day banking needs.

Mortgage fees

Another big part of finding the best deal is to understand the mortgage fees involved in the process.  Sometimes these will be added to the cost of the mortgage which means you will pay interest while other times they will need to be paid upfront before the mortgage is complete.  There are a few types to look at:

• Arrangement fees – also known as booking fees, they are applied by the lender for setting up the mortgage and can vary greatly or be a percentage of the loan
• Valuation fees – this is where a survey or valuation is needed and is to protect the lender to ensure the property is in good condition. You don’t normally get the results from this, but you do have to pay for it
• Legal fees – if you are remortgaging with the same company, there may be legal fees to pay as part of changing your deal

Cashback and special deals

Cashback is a big part of a mortgage lender’s repertoire of tactics to get people to come to them and make their deal more attractive.  Around a quarter of borrowers get some kind of cashback when taking a mortgage and this may seem great.

But it is worth checking that you are getting the best overall deal.  For example, you may receive cash back but if the interest rate is higher than a lender without the cashback, you are likely to pay more over the course of the mortgage.

Customer service standards

No-one anticipates problems with their mortgage, but it is worth looking at the customer service standards and reputation of any company before signing up with them.  Companies like Which? provide information on independent customer reviews to help you see how other customers rate a lender.  While it isn’t a deciding factor, if you have two very similar deals then their customer service rating can help you make a choice between them.

Use a mortgage broker

Perhaps the easiest way to get the best deal for your mortgage is to use a mortgage broker.  They can take all of your Mortgage Info and find the best possible deal.  Some companies have no fee or are paid a fee by the lender while others will tell you their fee upfront.  It is worth viewing this versus the time and work needed to find the best deal yourself. Taking the right steps will put you on the road to moving into your new home very soon.