FAQ: How to Get the Best Deal?
The million dollar question when it comes to getting a mortgage is where can you get the best one. Everybody likes a good deal, but within the mortgage market these are becoming increasingly hard to find.
When it comes to finding the best mortgage deal, the key is to shop around and not limit your search to one area.
Q, Should I Go To A Mortgage Broker?A, The answer is yes, but be sure to go to one that can offer you whole of market advice. In the past mortgage brokers had access to the best deals in the market and at times better deals than were being offered on the high street. In some respects this has now changed and banks are offering better deals if you go direct.
If you visit a mortgage broker you should ask them if they can offer direct deals as well. If they do, it is likely they will charge a fee of around £100 - £200, but they will tell you what the best deal out there is.
Q, Should I Go To My Bank?A, It is a good idea to go to your bank as well as a mortgage broker. Your bank may be able to offer you a special deal because you bank with them. Remember though, if you go to your bank they will only be able to offer you their products and not ones from other providers, which might be better.
Q, Should I Go Online For Advice?A, Comparison websites and the internet are great for narrowing down the best headline rate for a mortgage. For example, it might show the best deal as being on offer as a 2.59% fixed rate mortgage. But what they don’t tend to do is show the bigger picture. If the lender has any added fees or will not lend to certain people a comparison site does not have the tools to tell you this.
Q, Should I Apply To Lots Of Different Lenders?A, No, you should try and avoid applying to lots of lenders as it could damage your credit rating. When you apply to a lender for a mortgage they will do a credit check on you, if you have been applying to lots of different lenders this will work against you and leave what is known as a footprint on your record.
Q, Should I End My Deal Early If A Better Deal Comes Along?A, If you are on a two, three of four-year deal, it is best to try and stay with that deal until it has run its course. There are however some instances when you will get the better deal by switching. If you finish your deal early you may have to pay an early repayment charge, which can be hundreds and in some cases thousands of pounds.
You will also need to pay solicitors costs and valuation fees all over again. If however you made a bad decision and rates have now gone significantly down, there is no harm in switching to the better deal as long as it works out cheaper overall.
Q, How Often Should I Remortgage?A, A large misconception amongst mortgage borrowers is that you only remortgage when you need to take money out of the property, which is not the case.
When you take out a mortgage deal it will normally have an expiry date, for example a two-year fixed rate mortgage. Once that two years is over you should start shopping around again for the best deal. It could be that the rate is your lender’s Standard Variable Rate, which is the rate you are transferred to once your deal expires. If this is the case you should stay on it temporarily until a better deal comes along.
Q, Should I Go For A Fixed Rate Or A Tracker?A, You should go with what you feel comfortable paying back. If you have budgeted and are stretching to afford the current tracker rate as it stands, you should look at a fixed rate option. Tracker rates go up and down with the Bank base rate, so if you don’t want any nasty surprises go for a rate that is fixed and has no risk of moving up or down.
What is the best deal for one will not always be the best deal for another. The key to finding the best deal is to shop around and not settle for your first option. To get a whole of market view you are best gong to a mortgage broker, though they might charge a fee for this. There is no harm in enquiring to mortgage lenders but it is important you don’t make an application with everyone.