So you want to get the best mortgage rates?
The mortgage market has significantly changed in the last 5 years. The mortgages on the market is much smaller than a couple of years ago, 90% LTV mortgages have almost disappeared, and lenders typically are becoming a lot more careful. Gone are the days where lenders sell loans equal to five times your yearly income, and for people with bad credits rating, having a mortgage has become very hard. Despite the recession, there are still some great mortgage deals on the market. Check out these 7 tips to help you get the best mortgage rates:
1. Save for a larger deposit: while 95% LTV mortgage deals can still be offered by some mortgage brokers, the top mortgage deals are generally available on less than 70% LTV deals. Try to you save as much as you can afford for your upfront deposit.
2. Important upfront deposits are important for remortgages as well: because of the fall in home prices, you may well realise that the LTV for your house is greater than when you started your first mortgage. An option would be to utilise the money in your saving accounts towards a greater initial deposit in order to grab a more interesting remortgage deal.
3. Keep track of your credit record: the people worst affected by the recession are people with poor credit, also called “sub prime”. If you’ve got adverse credit, the mortgage rates available to you can be considerably greater as the lenders try to guard themselves against the danger of lending funds to a person with a poor credit record. Ensure you keep an eye on your credit record and take measures to bring back things on the right track.
4. Speak to a professional independent mortgage adviser: If you have got a special case, e.g. if you’re freelancing, it’s especially important that you talk to a mortgage advisor. A good independent adviser will work with you to understand your personal circumstances and select the best deals available for your situation.
5. Choose fixed rate products if you would like to have security: fixed rate products ensure that your mortgage repayments will remain the same and won’t fluctuate with variations in the BoE interest rate. This safety does not come free though, as fixed rate mortgages are normally less competitive than other products.
6. Select a tracker deal for the best rates: tracker rates follow the BoE rate. The interest rates offered for tracker mortgage deals are normally lower compared to fixed rate mortgage product. There is always the risk though that the base interest rate could increase and result in higher mortgage repayments if you choose a tracker mortgage.
7. Check the arrangement fees: the best mortgage deals sometimes have higher arrangement fees. It is vital that you take into account the total cost of your mortgage over the entire term, taking the arrangement fees into account, to understand what is the top mortgage deal for your circumstances.
1. Save for a larger deposit: while 95% LTV mortgage deals can still be offered by some mortgage brokers, the top mortgage deals are generally available on less than 70% LTV deals. Try to you save as much as you can afford for your upfront deposit.
2. Important upfront deposits are important for remortgages as well: because of the fall in home prices, you may well realise that the LTV for your house is greater than when you started your first mortgage. An option would be to utilise the money in your saving accounts towards a greater initial deposit in order to grab a more interesting remortgage deal.
3. Keep track of your credit record: the people worst affected by the recession are people with poor credit, also called “sub prime”. If you’ve got adverse credit, the mortgage rates available to you can be considerably greater as the lenders try to guard themselves against the danger of lending funds to a person with a poor credit record. Ensure you keep an eye on your credit record and take measures to bring back things on the right track.
4. Speak to a professional independent mortgage adviser: If you have got a special case, e.g. if you’re freelancing, it’s especially important that you talk to a mortgage advisor. A good independent adviser will work with you to understand your personal circumstances and select the best deals available for your situation.
5. Choose fixed rate products if you would like to have security: fixed rate products ensure that your mortgage repayments will remain the same and won’t fluctuate with variations in the BoE interest rate. This safety does not come free though, as fixed rate mortgages are normally less competitive than other products.
6. Select a tracker deal for the best rates: tracker rates follow the BoE rate. The interest rates offered for tracker mortgage deals are normally lower compared to fixed rate mortgage product. There is always the risk though that the base interest rate could increase and result in higher mortgage repayments if you choose a tracker mortgage.
7. Check the arrangement fees: the best mortgage deals sometimes have higher arrangement fees. It is vital that you take into account the total cost of your mortgage over the entire term, taking the arrangement fees into account, to understand what is the top mortgage deal for your circumstances.
Remortgages - Is fixed rate better than variable?
Applying for a remortgage is a very easy decision for house owners. They already have a mortgage, and remortgaging simply means attempting to find a more interesting rate on their mortgage than the one currently offered by their lender. For lenders, however, a mortgage is a huge risk: this results in lending a large amount of money. In the present climate, with the possibility of a house price collapse, mortgage lenders are ultra careful about how they lend money, and this is fully justified mortgage lenders want to stay in business, and they must be careful that they don’t give a mortgage to people who cannot afford them.
The consequence is that nowadays lenders have become careful and are a lot more choosy towards their clients, to the point of restricting the options offered to home owners. The days of 100% remortgages are gone, and mortgage lenders now require for much more limiting criteria when it comes to allowing a remortgage.
They are several options when it comes to remortgage deals, but one of the key choice you will have to face is the distinction between fixed rate and variable mortgages.
In the case of fixed rate products, the rate stays fixed, and don’t go up or down, even if the BoE interest rate fluctuates. The benefit of fixed rate remortgage deals is that you know from the beginning what your monthly remortage payments will be, and you’ve got the guarantee that these monthly mortgage repayments will stay constant for a fixed period. Most mortgage lenders have got fixed rate mortgages for periods between 4 and 15 years. The disadvantage of fixed rate mortgage deals is that your mortgage doesn’t benefit of a decline in the BoE interest rate, like the one we have been through recently.
Variable deals in the other end don’t have a fixed interest rate. The rate goes up and down with the BoE base interest rate. The interest rate is generally determined by the BoE interest rate and a fixed increment, for example 0.5% (BoE interest rate) + 2%(increment) which results in a mortgage rate of 2.5%. Because we currently are in a period of low interest rates, variable mortgage deals are an attractive option. But there is always the possibility that the BoE interest rate might rise, and this would as a consequence increase the rate of variable mortgage deals.
Do you value the safety of fixed monthly repayments and are ready to accept that this can cause higher mortgage interest? If so a fixed rate mortgage could be the better option for your circumstances. Are you interested in the lowest possible interest rate, but know that this might give you high monthly repayments if interest rates go up? Then variable rate mortgage deals can be a betterchoice for your circumstances.
The consequence is that nowadays lenders have become careful and are a lot more choosy towards their clients, to the point of restricting the options offered to home owners. The days of 100% remortgages are gone, and mortgage lenders now require for much more limiting criteria when it comes to allowing a remortgage.
They are several options when it comes to remortgage deals, but one of the key choice you will have to face is the distinction between fixed rate and variable mortgages.
In the case of fixed rate products, the rate stays fixed, and don’t go up or down, even if the BoE interest rate fluctuates. The benefit of fixed rate remortgage deals is that you know from the beginning what your monthly remortage payments will be, and you’ve got the guarantee that these monthly mortgage repayments will stay constant for a fixed period. Most mortgage lenders have got fixed rate mortgages for periods between 4 and 15 years. The disadvantage of fixed rate mortgage deals is that your mortgage doesn’t benefit of a decline in the BoE interest rate, like the one we have been through recently.
Variable deals in the other end don’t have a fixed interest rate. The rate goes up and down with the BoE base interest rate. The interest rate is generally determined by the BoE interest rate and a fixed increment, for example 0.5% (BoE interest rate) + 2%(increment) which results in a mortgage rate of 2.5%. Because we currently are in a period of low interest rates, variable mortgage deals are an attractive option. But there is always the possibility that the BoE interest rate might rise, and this would as a consequence increase the rate of variable mortgage deals.
Do you value the safety of fixed monthly repayments and are ready to accept that this can cause higher mortgage interest? If so a fixed rate mortgage could be the better option for your circumstances. Are you interested in the lowest possible interest rate, but know that this might give you high monthly repayments if interest rates go up? Then variable rate mortgage deals can be a betterchoice for your circumstances.
