The mortgage is the single most important debt in most peoples lives in the U.K - and is also commonly the largest. Securing a mortgage has become more difficult in the last few years, thanks to the credit crunch, but there are still lenders out there competing to secure new business. This competition is not just to win the custom of first time buyers - there is also significant competition in the remortgage market. Here are a few tips to make sure that you find the best mortgage for you.
First time buyers need to make a choice between fixed rate, and variable interest mortgages. Fixed rate mortgages offer the security of guaranteeing no nasty surprises should interest rates change, allowing for more easy budgeting and planning for the future. This security generally comes at the price of a higher rate of interest than that offered by variable rate and other mortgage deals.
Variable rate and tracker mortgages can increase or decrease in monthly cost, and are affected by the bank of England base rate. It is important to take note that the Bank of England base rate influences the rates of interest offered by lenders, but does not exactly determine it banks set their own interest rates, and these are currently (and usually)above base rate. It is also equally important to realise that the current record low base rate means that there is only one way that the base rate is likely to change in future, and that is to go up when this will happen, will largely depend on the rate of recovery from the current recession.
Tracker mortgages change like variable rate mortgages, moving up and down with changes in interest rates, but again, have a distinct set of rules determining how and when these changes take place a decrease in the base rate will not always be met with a concomitant decrease in the interest rate of the tracker mortgage; and equally, a time lag often applies between changes in the base rate, and any changes in the rate of interest offered by the lender supplying the tracker mortgage.
The essential thing to remember for those researching mortgages, whether first time buyers or those looking to re-mortgage, is to set aside a bit of time for the task this is a huge and complicated field. Try starting your research on mortgages not just on the sites of the established lenders like Santander (try their website for quotes on
mortgages), but also at the comparison and money advice websites. The more time you can spend looking around before entering a new mortgage, the better your chances of securing the right deal for you.
