Getting the best mortgage deal may not be as straightforward as you think, especially if your trying to get a bad credit mortgage. Many people are under the assumption that simply getting the lowest mortgage rate means that it’s the best deal, but this isn’t the case. A mortgage interest rate is just part of what makes up your entire mortgage. Once you factor in other conditions such as arrangements fees, valuation fees and booking fees, you may find that a product with a slightly higher rate and lower fees actually works out cheaper.
We’ve outlined 3 ways to get the best mortgage deal that you’ll qualify for.
1. Consider more than just the interest rate
Mortgage interest rates are a good indicator of whether or not you’re getting a good deal, however it’s just a starting point. Always consider the total cost of the mortgage and don’t be so focused solely on rates, which is what a lot of people will do.
Mortgages with the best rates tend to have higher arrangement fees, valuation fees and booking fees. These fees can run into thousands of pounds and before you know it, you’re actually taking a mortgage that is more expensive than a mortgage with a higher rate. Mortgages with higher rates tend to have fewer fees attached. Some mortgages will even have free valuation fees and free legals. Mortgages such as these can often work out cheaper over the duration of your mortgage term.
Calculate your total outgoings and you can soon assess which mortgage will be cheaper over a period of time.
2. Your individual circumstances
The products you qualify for will also have an impact on the deals you’ll be able to secure. For example, if you have adverse credit or difficult circumstances, the majority of lenders may decline you. As a result, the lenders that are willing to provide you with a mortgage may do so, but only with higher rates attached. Lenders may charge higher rates for circumstances such as adverse credit, as you’ll be deemed high risk as a borrower, due to your previous financial conduct.
Having a large deposit can also help secure the most favourable mortgage deals. Deposits of 5-10% may warrant you a mortgage, however the rates on offer won’t be the best. Deposits of 25% and above will warrant some great products, subject to the rest of your criteria. If you have a deposit of 40% or above, then you can be sure that the best rates will be offered to you. Again, this is subject to the rest of your criteria being suitable for the lender.
3. Speak to a qualified mortgage advisor
Using an experienced mortgage advisor can save you a lot of time, money and frustration. Often enough buyers try and go at it alone and as a result, overpay on their mortgage by thousands of pounds or even worse may lose a deal with an estate agent as the mortgage paperwork simply isn’t carried out fast enough.
Mortgage brokers secure mortgages on a daily basis. They’re constantly talking to lenders to understand their criteria and can also liaise with estate agents if it means a deal is secured. For example, your agent may need a decision in principle to accept an offer. An experienced broker can usually provide this document in little time.
Furthermore, if you use a whole of market broker, your broker will search the entire mortgage market for you to secure you the most favourable deal.
Yes brokers will charge fees, however they usually pay for themselves in the amount of money you can potentially save in doing so. Mortgages are complex products and this is why reputable brokers are in very high demand.
If you have circumstances such as adverse credit or you haven’t been employed for very long, or you’re self employed, then using a broker can be the difference in being approved or declined. Many people with difficult circumstances will apply with high street lenders only to be declined. Being declined can knock your credit score, so it really isn’t best advised. Searching for the perfect house can take up a lot of time and it can also be stressful for some. Trying to find the perfect mortgage out of thousands of deals can sometimes get in the way. This is why brokers can be so useful and worth the fees they charge.