Find out more: Guide to second-charge mortgages. Rates can be found as low as 1. It is often the case that headline-grabbing low rates also come with the highest fees, which can make a significant difference to the overall amount you pay over the term of the deal. It is worth considering government schemes aimed at helping first-time buyers with a low deposit or those earning a lower income. Through the scheme, the government guarantees to compensate lenders for a portion of their losses should the borrower be unable to repay the mortgage.
Find out more here about how it works. Be aware: it is not guaranteed you will qualify for an advertised mortgage deal, and lenders often have strict criteria for who is eligible. It can be worth speaking to a mortgage broker , who will have access to a range of deals across the market. This article contains links from which we can earn revenue. This revenue helps us to support the content of this website and to continue to invest in our award-winning journalism.
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By entering your details, you acknowledge that your information will be used in accordance with our privacy policy. You can unsubscribe at any time. Searching Money Mentor. Our full guide to tracker mortgages explains more. When your fixed, discount or tracker period ends, you'll be moved on to your lender's standard variable rate SVR.
The SVR is usually much more expensive and can change on a month-by-month basis, so it's important to switch to a new deal remortgaging before the end of your deal period. Find out more in our full guide to standard-variable-rate mortgages. Interest rates aren't the only thing you'll need to consider when comparing mortgage deals.
Fees can make a big difference, too, and there are several different types you should watch out for:. Some lenders offer fee-free deals, but the mortgages with the cheapest interest rates usually come with hefty up-front fees. It can be possible to add arrangement fees to your mortgage balance, but this usually isn't advisable, as you'll then need to pay interest on them. Up-front fees can add to the cost of borrowing, but early repayment charges ERCs could sting you further down the line if you choose the wrong fixed term on your mortgage.
ERCs are generally charged on fixed-rate mortgages of five years or longer, and they mean that if you decide to pay off the mortgage early including by moving home and taking out a new mortgage , you may need to pay thousands in charges. You can sometimes avoid ERCs by getting a portable mortgage, which you can take with you when you move home - but bear in mind your old mortgage might not be the most suitable for your new property.
A mortgage deal's annual percentage rate of charge APRC is a calculation of how much you'd pay if you stuck with the deal for its entire term, until you've paid off the mortgage in full. This means the APRC incorporates the initial rate and fees but also the SVR, which you'd be moved onto at the end of the initial deal period.
While it can be interesting to see how deals compare on this measure, the APRC won't be that useful if you're planning to remortgage when your initial period ends - which you almost always should. Some lenders offer cashback and other incentives to make their deals more attractive to potential customers - but you should always weigh up whether a quick injection of cash is worth it if it means paying back more in the long run.
These sums are unlikely to make a significant difference in the long run, so you should consider cashback a 'nice to have' on a mortgage, rather than a reason for choosing a specific deal. It's important to consider the quality of the lender behind your chosen deal. After all, a low interest rate is great, but if it's coming from a lender who won't answer your calls when you have questions, is it worth the saving? Every year, Which? The Which? Recommended Providers from are in the table below - but if you'd like to see how all of the UK's biggest mortgage lenders fared, check out our full list of mortgage lender reviews.
Find out more in our individual reviews: First Direct review , Coventry Building Society review , Nationwide mortgages review. When it comes to mortgage-hunting, many people start by talking to their own bank - but it would be a lucky and unusual coincidence if that was where the best deal was to be found.
In fact, it's often not banks offering the best deals at all, but building societies - and they're sometimes ones that you won't see on your local high street. So, to get a full picture of the deals on offer, you really should include building societies in your search, especially since two of our three Which?
Recommended Providers for were building societies. Use our mortgage repayment calculator to find out what your repayments would be at different interest rates.
This will give you a better idea of how much you can afford to borrow, both now and if rates change in the future. There are thousands of mortgages on the market, each with vastly differing rates and fees, so it's important you don't settle for the first one you find. You can compare the best mortgage deals currently on the market by visiting Which?
Instead of paying your mortgage fees upfront, you may have the option of adding them to your loan. This can be a helpful option if you're low on cash, but it will result in you paying interest on these fees over time. So if you think you might want to move house in the next few years, consider playing it safe by choosing a shorter-term fix. Choosing a mortgage is complex, so it can be useful to use a mortgage adviser or 'broker' , who can advise you on the best deal for your circumstances.
Be aware that some mortgages are only available to people applying directly without a broker , while for other deals the opposite is true and you'll only qualify if you apply through a broker.
To complicate matters further, some mortgage brokers just work with a select panel of lenders, meaning they won't be able to tell you about deals from other lenders which may be cheaper. If you want to make sure you're really getting the best deal, it's advisable to use a 'whole-of-market' broker who will be able to look at every mortgage on the market including direct-only ones and recommend the right option for you.
With a buy to let mortgage, lenders take both your income and a percentage of the rental income you will get from letting the property into account.
Your home may be repossessed if you do not keep up repayments on your mortgage. A mortgage is essentially a loan from a bank specifically provided for the purchase of property. The reason it's called a mortgage and not a loan is due to a subtle yet significant difference between the two.
So what is the difference between a mortgage and a loan? If you miss a payment or have trouble repaying a loan, the provider of the loan will chase you for it in the usual way that they might for most other credit product types. However if you were behind on your mortgage repayments and were close to being unable to afford it, the bank could take repossess your home.
A mortgage also allows you to start using the property immediately, so you would not need to repay the amount in full to start living in it or start renting it out to a tenant. You could start using the property once the sale has completed, but this would obviously depend on you keeping up with repayments every month.
Mortgages are typically taken out for longer terms like 25 years. The longer your term the more spread out your costs, so the lower the monthly repayments, but the longer it will take to repay. The LTV, or loan to value , is the ratio between the value of your property and the amount you're looking to borrow. All mortgages have a maximum LTV — that is a maximum percentage of borrowing in relation to the house value. Typically the higher the LTV the higher the interest rate of the mortgage.
Mortgages for first time buyers tend to have higher LTVs, and hence higher rates, in comparison to a remortgage for existing homeowners. The APRC is a good way of comparing different mortgages. It takes the overall rate charged over the lifetime of the mortgage, incorporates any fees, and gives you a baseline comparison rate. While some mortgages may offer a low rate for the first two years for instance, once they revert they may prove to be more expensive over the full term.
Or, conversely, one rate may have a lower rate but have high fees associated with it. The APRC allows you to compare these mortgages and see what the best overall product is for you.
A mortgage lender will need to do their own property valuation before offering you a mortgage, but you can get a good indication by using the value quoted by a surveyor. Whilst some mortgage providers use a surveyor it is more common these days for a drive by valuation or desktop survey to be conducted. Your mortgage provider will combine this with land registry data, recent sales in the area, macroeconomic data, and house price indices. Commercial Mortgages.
One of the most common and important factors for people buying a home is working out how much the monthly mortgage payments will be. The payments will depend on the budget you've set for the property type and area you want to buy in, as well as your income and deposit. Once you have a figure in mind, you can start to compare UK mortgage rates by using a comparison site.
You can also speak to a mortgage broker or lender to see if you can get the mortgage you want at your price range and financial circumstances. You will need to also compare the various terms of each mortgage type.
Ask yourself:. How much will my mortgage cost if interest rates rise? If you are able to switch to a better deal, how much would the penalty fee cost you to leave your current mortgage provider? It's important to think of the answers to these questions as early as possible in the home buying process, and ideally it should be done when you start comparing mortgages so you can have a better idea of the kind of mortgage that will work for you.
You can use our comparison tool to see a wide range of mortgages from many of the country's leading mortgage providers. Once you know what mortgage type you're after just answer some questions and we'll find deals personalised to you.
Tell us your estimated property value, your deposit figure, the term over which you want to repay your mortgage, and how long you want to fix your interest rate for. Even if you have the necessary income and deposit available, lending criteria has been tightened in recent years.
You can get an idea of what you could afford by using our affordability calculator above. Mortgage lenders will usually want to see around 6 months' of bank statements. They want proof of income coming in regularly, and they may look at your recurring expenses to get an idea of how much of your income you are spending each month.
Spending a large amount of your monthly income may be seen as riskier to the lender. In the run up to applying for a mortgage make sure to budget properly. Look at all your spending habits before you even start comparing mortgages. Are there any standing orders or Direct Debits you have been paying for years that you don't need? Can you cut down on your weekly shopping spend or minimise how much you spend on nights out?
Begin with a budget of your regular outgoings — the more you monitor your spending the more likely you are to cut back the little things. To make the home buying process much smoother though, you should consider getting a mortgage decision or agreement in principle AIP. Getting an AIP means that the lender or broker has assessed your circumstances and credit rating and would in theory approve you for a mortgage of a certain value. Rather than going through the entire mortgage application process once your offer has been accepted, an AIP usually means that your application is at a more advanced stage and your mortgage is more likely to be approved, meaning that there's less chance of finding problems further down the line.
Mortgage interest is similar to interest on any other loan product. When you borrow money, you have to pay it back with interest. However, the interest rate is even more important on a mortgage because it is likely you will be paying off your mortgage for many years, often as long as 25 to 30 years. So how is interest calculated on a mortgage loan? Mortgage interest rates are calculated quite differently than other types of credit and loans.
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