Consumers across the country are increasingly going online to search for the best mortgage deals.
Legal & General's Mortgage Mood survey has revealed that 34% of potential borrowers say turning to the internet is their first port of call when it comes to sourcing the best deal.
Interestingly, more than twice (46%) as many potential borrowers turned to friends and family for advice on mortgages as opposed to asking lenders (21%).
The advantages of using the internet to source your next mortgage is that you're able to see for yourself all that is on offer. Although you may find a good deal by going straight to your bank or building society, you can't ever be certain it is the perfect match.
But when faced with so much choice, it can sometimes be hard to know what to look for.
Introductory Rates. Probably the single most important consideration when selecting a mortgage. With mortgages there are two types of rate: fixed or variable. Put simply fixed won't change, but variable might. Fixed rates give you more security (as you know what you'll be paying for a set period) but tend to have higher fees.
The risk with a fixed rate is that interest rates will drop but that your rate doesn't, meaning that you have to fork out the same each month whilst those on variable mortgage rates enjoy lower payments.
The risk with a variable rate is that if rates rise you will pay a lot more for your mortgage. For instance, if your rate increased from 4.00% to 5.00% it could cost you up to an extra £83 per month on a mortgage balance of £100,000!
Term. The next thing you need to think about is how long you would like the introductory deal to be. For a fixed rate this is important as it is usually the case that you are "tied in" to your mortgage for the introductory period, meaning you may have to pay an early repayment charge if you want to switch mortgage deals or repay the balance in full.
There may be a tie in for a variable rate mortgage as well though so check Section 10 of any Key Facts Illustration you are given to find out what, if any, Early Repayment Charges are payable. As with rate there is no right or wrong choice. You may want to fix your rate for three years so you know what you are paying while you are supporting your child through university, or you might be planning to repay your mortgage at the end of five years when you sell some shares. The point is: have a plan. Don't be constantly remortgaging every two years just because that's what you think everyone else does. This is your mortgage, select it based on your requirements.
Set up costs. How much it costs to set up your mortgage can be a deciding factor in the deal you end up choosing, particularly if you are remortgaging. There are usually fees to pay for arranging the mortgage, a valuation fee and legal fees. If you want to try to minimise the payment of any upfront fees, there are deals that offer this (although be prepared for this to be at the expense of a higher rate).
Flexibility. Flexible mortgages can allow you to:
Offset Mortgages. Offset mortgages are great, they allow you to put your savings into an account and reduce the interest charged on your mortgage. This usually saves you a packet as mortgage rates tend to be a lot higher than what you would have earned on your savings. So this type of mortgage might be is worth considering if you have a large pot of savings that aren't working very hard for you.
If you are looking for a mortgage, why not compare mortgage rates with Moneyfacts.co.uk's best buy tables to find the most competitive deal for your circumstances.
Still in doubt?
Legal & General's survey also revealed that seeking independent financial advice ranked highly amongst respondents, with 53% saying they would consult a broker in the search for the best mortgage deals.
So if you are still uncertain about which mortgage product is best for your circumstances, then it's worth contacting a mortgage broker.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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