Is it possible to compare different mortgage deals?
The short answer is ‘Yes’. And the good news is that there is likely to be a mortgage suitable for you amongst the hundreds out there, so lets get straight on with our top tips to assist you with your mortgage search.
As I said , there are literally hundreds of different mortgages available to buyers, and comparing them isn’t always easy as it’s not all about the figures – and it is about your life for years to come. With this big decision in mind, make sure you ask all the questions you need and that you fully understand the answers you are given.
Get your paperwork in order before you have your meeting with your broker or bank manager and prepare some questions beforehand so you don’t forget them.
To help we have put together seven key questions you should be asking:
- The initial interest rate and when it ends.
- What the interest rate will be after the initial period.
- What the monthly payments will be during and after the initial period.
- Are there penalties for leaving the deal?
- Can I overpay each month?
- Is there a fee if I pay my mortgage off early?
- Are there any fees? Can I pay these upfront or are they added to the loan?
As well as these seven key questions you should also consider the following points :
Building societies and banks are all in competition to win your mortgage business, and to attract you they offer a variety of their own deals so it really is worth shopping around the whole market. Our advice is to use an independent, qualified mortgage broker who has access to as much of the lending market as possible.
Now remember there are so many different scenarios – from the amount you want to borrow, to the value of your home and the period of time you want to borrow money for. So this makes picking out the best mortgage for you and comparing like for like difficult.
Add to that whether you want to fix your payments at a set figure for several months, you’ll see how the number of options is vast. If you find you have a poor credit score, this will again change things for you. So your mortgage advisor is the key person who will assist you with comparing these variables and ultimately finding you the perfect mortgage.
So when it comes to your actual choice, low interest rates can be negated by an arrangement fee so it’s always critical to factor in the impact of an arrangement fee on the total cost of the mortgage.
And it’s not always the cheapest monthly payment that will dictate which mortgage you choose.
Lenders use a figure called the Annual Percentage Rate of Charge (APRC) to help you compare mortgages. It includes any additional fees in your mortgage deal such as valuation or redemption costs and is the total cost of credit, shown as an annual percentage.
Because all lenders calculate and express this in the same way, you can compare them using this figure. However the one aspect APRC won’t tell you is whether you meet all the eligibility criteria for that particular mortgage. When just looking at the APRC you are assuming you meet the criteria.
However buyers can fall slightly short on the amount of deposit available, income or affordability criteria, the type of property, the construction and a whole host of other criteria small print.
This again is where your mortgage advisor will come to the rescue and ensure you only look at mortgages that are right for your circumstances and that you meet the eligibility criteria.