Getting a mortgage is generally the biggest financial commitment you will ever make, but with thousands of mortgage products available, “How Do I Find The Best Mortgage Deal?” Allow me to explain.
Mortgages can be a tricky field to navigate, and with the recent news about the Bank Of England base rate being cut, finding the right deal could save you £100s of pounds a month, and who doesn’t want that?
Exactly! With that in mind I’ve put together a simple guide on how to find the best mortgage deal for you – whether you’re buying for the first time, or looking to remortgage.
- First, Decide What Type Of Mortgage You Want – Repayment or Interest Only? Fixed Rate or Variable?
Let’s break it down:
A repayment mortgage is one where your monthly repayments are paying off the capital amount you borrowed as well as the interest. This means that the full amount you borrowed will decrease throughout the term, and by the end your loan has been fully repaid. Simple. This is generally your best bet as more lenders offer a repayment mortgage, and as a rule you can borrow more.
With an interest only mortgage, yes the monthly payments are less because you are only paying off the interest – but a lender will need proof that you can pay off the capital at the end of the term, so you’ll need to have a plan in place. Lenders are far less likely to offer this type of mortgage than a repayment mortgage.
‘Fixed rate’ and ‘variable’ do exactly what it says on the tin – with a fixed rate mortgage you know exactly what your payments are, where as a variable rate, well, varies. It used to be that a variable rate mortgage was your cheaper option, but this is no longer always the case.
- Find Out What You Can Get – Whichever type of mortgage you are trying to get, the rates you pay will depend on how much the house you want is worth, and how much of a deposit you have. Comparing mortgages can be confusing, but don’t be tempted to just go to your bank and expect the best or cheapest deal. Banks will only tell you about their own mortgage products, and with over 6,000 different options out there it’s highly unlikely that what they have is going to be the best deal for you.
Wouldn’t it be great if there was someone you could turn to for help, a professional who could do all the hard work for you….
- Go To A Mortgage Broker – A mortgage broker is like a human price comparison site, the middleman between you and the lenders. A broker’s advice is invaluable as they have access to all the products out there, and know all the lenders’ criteria. This enables them to find the best deal for you.
Another advantage is that they meet with you in person so they can get to know exactly what it is you are looking for before they give you advice, as well as helping you gather necessary documentation and complete applications. Not only that, but brokers are a fully regulated and insured body who are responsible for the advice they give, which is reassuring isn’t it?
Some brokers do charge a fee for their advice (we don’t, by the way!), but normally that fee isn’t payable unless the new mortgage happens.
- Check Your Paperwork – As you can probably guess, there is a lot of paperwork involved in taking out a mortgage. A part of that is the ‘Key Facts Illustration’ – which is, wait for it…an illustration of the key facts; that is the main points you need to know about the mortgage product. You’ll be given this before you make your mortgage application , and you should check it carefully before going any further.
Once you’ve decided to go further and have applied for your mortgage, your lender will send you your mortgage offer. This will give you all the facts, not just the key ones, as well as all the terms and conditions that you’ll be agreeing to.
Although possibly not the most riveting document you’re ever going to recieve, it is important that you read it through and make sure that all the details are accurate – even down to the spelling of your name. The slightest inaccuracy can result in extra costs, delays, and maybe even in you losing the mortgage offer altogether.
Check for the unexpected as well as for errors; especially if it’s something that contradicts your Key Facts Illustration. This includes any conditions you are expected to meet, as well as details of fees and early repayment charges etc.
And there you have it; going into this process armed with as much knowledge as possible is key. Make sure all documents are read carefully and that you don’t rush into any decisions without being fully informed.
I would always recommend speaking with a mortgage broker instead of going it alone, unless you have significant knowledge of the industry – the mortgage maze is tricky to navigate, and it’s easy to get lost! Allowing an expert to guide you will make your journey a lot smoother and more stress-free, enabling you to find the best mortgage deal for you.
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