How to get the best mortgage rate - Family Budgeting (2024)

Today we are going to look at how to get the best mortgage rate

How to get the best mortgage rate – top tips

Do you wonder how to get the best mortgage rate? Read on to find out …

Finding an affordable mortgage rate can save you thousands of pounds. That’s money that could be put aside for renovations, decorating or even a holiday!

But with so many lenders and limited time, it can be hard to find a competitive rate that comes with favourable terms and conditions.

Here are some tips to help you find the right mortgage…

Look beyond the high-street

Although some banks offer loyalty discounts to current customers, it’s always worth checking lesser-known brands and lenders.

Larger banks can have restrictive lending criteria whereas smaller specialist lenders may take other factors such as bad credit into consideration when assessing your ability to repay your mortgage.

Use a mortgage broker

Scrolling through websites and scanning lender rates is time consuming, not to mention confusing if you have a limited knowledge about the current market.

A mortgage broker can relieve you of this task and compare hundreds of rates, eliminating any lenders that are less likely to accept you in the process.

A broker can save you money

Application fees can be expensive. A broker can filter through the list and recommend the most suitable lenders, which also prevents unnecessary mortgage rejections on your credit file.

Working with a broker will also give you access to rates and deals that aren’t visible to the public.

A broker’s experience is key to finding the best rate

A good tip is to use a mortgage broker with whole of market coverage. Essentially, this means that will have access to a variety of rates from a wide spectrum of lenders.

A Mortgageable state mortgage broker can relieve you of this task and compare hundreds of rates, eliminating any lenders that are less likely to accept you in the process.

Pay the biggest deposit you can afford

The larger the deposit, the less you have to borrow. This opens up your mortgage options as well as the rates that are offered to you.

A smaller deposit means that as a buyer, you would own less of the property. This is risky to a lender as they’ll have to loan you a larger amount of money.

Because of this, they may charge you a higher rate of interest which can be expensive in the long run.

How can you save a bigger deposit?

The interest rates on a lot of savings accounts can be pretty low, but that’s not to say that you should completely dismiss the idea.

If you are a first time buyer, you may be eligible for a Help to Buy ISA. For every £200 you deposit into the account, the government will give you a bonus of £50.

In fact, the government will give you a maximum of £3,000 towards your first property and if you’re buying with a partner who is also a first time buyer, they could open an account and receive a government bonus of up to £3,000 too.

Improve your credit score

Credit scores are used by lenders to assess the likelihood that you’ll default on your mortgage payments. A high credit score demonstrates your ability to make payments in time and in full, therefore making you more appealing as a borrower.

Frustratingly, every credit reference agency (CRA) uses a different set of criteria to calculate your credit score.

One may give you a better score because you have settled a recent debt whilst another may focus more on the date of the debt and therefore give you a lower score.

However, even with a lower credit score, it may still be possible to get a good mortgage rate.

How to improve your credit score

There are lots of simple things that you can do to help boost your credit score and appeal to lenders.

Check your credit report regularly
Dispute any mistakes
Register to vote
Avoid applying for multiple credit in a short period of time
Make any loan or credit payments on time and in full
Get a ‘bad credit’ card and make regular and on time payments

Factor in fees

The interest rate on a mortgage should be a huge consideration when comparing different deals but you should also think about the fees.

Before you sign a mortgage agreement, read thoroughly through it and look at how much your lender will charge you for:

Arrangement fee

This is the fee that lenders will charge you to arrange your mortgage.

Usually, the lower the interest rate, the higher the arrangement fee.

It can be helpful to have your mortgage broker compare the costs as in some cases, it may be cheaper to go for a higher interest rate and a lower arrangement fee.

Early repayment fee

You would think that paying off your mortgage early would be a good thing. Unfortunately, this would means that your lender would lose money in interest charges.

Therefor, many will want to discourage early repayments with heavy fees.

Overpayment fee

Most lenders will allow borrowers to overpay their mortgage by 10% of the remaining balance.

That being said, many will also charge penalties for any overpayments, so always check your mortgage agreement before you make a costly error.

I hope you have found this post on how to get the best mortgage rate really useful.

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