It’s a tricky time for first-time buyers, home movers and remortgagers. Though spiralling mortgage rates appear to have steadied – and may even be decreasing – things remain uncertain.
It can be difficult to know the right thing to do and where to turn for advice, and the reality is a mortgage secured in the next few months is likely to cost you more per month than it would have one or two years ago.
That said, it’s still perfectly possible to get a good deal on your mortgage – plus plenty of pitfalls to avoid in order to get the right deal for you. So, what should you do?
Know what you want
There are several different types of mortgage out there, from tracker to fixed to buy-to-let and interest-only. Each will have different best available rates and deals, so take a little time to research each type and understand what will be best for you.
Of course, you can seek advice on this too, however a little bit of knowledge and understanding is likely to make you feel more comfortable and confident throughout the process.
Don’t assume your bank or current lender will give you the best deal
Remember that Nationwide advert from a few years ago in which a current mortgage client attempted to secure a better deal, only to be told that these were for ‘brand new customers only’?
While banks have become a lot more competitive in recent years, they can still only offer you something from their own suite of products. It might be that they really do have the perfect deal for you, but it is unlikely. Even so, it’s best to do your due diligence and shop around for your mortgage.
Speak to a mortgage adviser
Naturally, we’d recommend speaking to a mortgage adviser – but this really is good practice. A mortgage adviser will be able to help you access deals only available to brokers and will guide you through the process.
It’s important to pick the right mortgage adviser, however, so be sure to ask them these two crucial questions:
1. Do you have access to all mortgages on the market?
Some advisers will only be able to recommend specific lenders. Others will tell you they check all deals available to brokers, meaning they won’t check those products available directly to the consumer. In both cases, you could be missing out on the best deal for you.
2. How do you get paid?
Some mortgage advisers charge a fee upfront, usually up to 1% of the total mortgage value. Others are fee-free, but may not check every offer on the market.
For the record, we offer a fee-free service, receiving a commission from your chosen lender, if and when you complete on your mortgage. We check every mortgage product on the market and if there is a direct-to-consumer deal that is better for you, we’ll tell you about it.
Don’t use the APRC to make comparisons
Lenders have to tell you about the APRC (Annual Percentage Rate of Charge), but that doesn’t mean you should give it much attention. The APRC is essentially the average rate of interest you’d pay over the entire term of your mortgage – not just while you have a fixed deal.
It’s typically meaningless because most people will remortgage once their deal expires and many will pay their mortgage off before the full term is complete. Plus, the standard variable rate used to determine the APRC will move during the term of your mortgage.
Instead, consider the best available rates over the fixed term of your mortgage to determine the best deal for you.
Plan six months in advance
If your current mortgage deal is coming to an end, try to start planning at least six months before you need to renew. This will allow you plenty of time consider all of your options and may even allow you to secure a better deal.
Most lenders will guarantee an offer for at least three months, and should allow you to withdraw your application if a better deal emerges during that time.
Your mortgage adviser will also be able to tell you whether they think rates might improve if you wait a little longer. This might be determined by personal circumstances or by external factors. Remember, brokers are just making predictions and they could get it wrong however, this way you will be armed with expert advice to make an informed choice.
Ready to talk about your mortgage? Get in touch with our team.
