Best mortgage rates in the UK

What are the best mortgage rates for you?

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Finding the best mortgage rates in the UK

There are thousands of mortgage providers in the UK, and every lender, agent, and directory will claim they’ve got the rates and offers you’re looking for.

Of course, nobody can claim to have the best mortgages for every type of borrower. The market is vast and caters to every unique situation. It’s unlikely that one provider will have the ideal rates for a single-parent, low-income family and a commercial developer looking to finance their next project.

So, what are the best mortgage rates for you, and where can you find them?

Mortgage trends show that current deals don’t stick around for long

With a recession looming and inflation at an all-time high, it’s tricky to predict precisely how mortgage rates will change over the coming year.

The Bank of England interest rates have just taken yet another jump, and as interest rates climb, so do the costs of tracker and variable rate mortgages (As of September 2022). So locking down a fixed-rate deal could well be the best way to go for the foreseeable future.

Regarding the trends in this highly changeable period, we're seeing that mortgage deals don’t stick around for long; the average over the past few months appears to have shelf lives of about two to three weeks.

Scouring the market for the best of them means checking multiple websites and mortgage directories for your best-bet offers and repeating the process regularly—so how can you find the best mortgage rates (UK) for you right now?

What type of borrower are you?

Depending on where you are on the borrower journey, you could qualify for specific deals and specialist support.

Remortgage

If you’ve already got a mortgage, but your financial circumstances have changed, or you think there are better deals available, remortgaging could be for you. A new contract with an alternative provider and paying off your existing lender can often save money through lower rates and preferential terms.

First-time buyer

If you’ve never had a mortgage before, then all kinds of introductory offers are available as lenders fight to get all that brand new custom. A selection of Government schemes may also help get you onto the property ladder.

Buy-to-let

Buy-to-let mortgages are specially designed for those buying property as an investment—if you’re looking into becoming a landlord, this is the option for you.

What type of mortgage do I need?

If you’ve never had a mortgage before, it’s not a one-size-fits-all product. There are various options to cover a range of situations. Just like your savings earn more or less when the interest rates fluctuate, so can the repayments of certain mortgage types.

Fixed-rate

A fixed rate is precisely that. For the term of your deal, you’ll pay the same rate of interest whatever the Bank of England does to the base rate. You’re protected from any interest rate and price hikes for terms up to as many as ten years.

Tracker

Tracker mortgages follow the BoE base rate but are typically a few percentage points higher. So as the base rate increases, so will your mortgage payments.

Discounted variable rate

Variable rates are similar to tracker rates, but instead of being linked to the BoE base rate, they’re linked to your lender’s standard variable rate (SVR).

Lenders change their SVR to suit the situation, translating into changeable costs of repayments depending on the market. Discounted variable rates are usually a set percentage below the lender’s SVR.

Standard variable rate

A lender’s SVR is usually a few percentage points above the BoE base rate, so if you’ve dropped back onto an SVR at the end of a fixed rate term, you could be paying more than you have to. Switching to a new fixed-rate deal or a tracker mortgage should save you money.

Interest-only

Taking out an interest-only mortgage lowers the cost of your repayments significantly because you’ll only be paying the interest and nothing off the capital.

You’ll need to pay off the original loan at the end of the term, requiring a savings plan to cover that cost. Alternatively, you can sell the property to pay off the loan and take any equity you’ve earned from the property.

Offset

If you have savings, you can use them to offset your mortgage repayments. The value of your savings is deducted from your outstanding mortgage balance, and you only pay the interest on the remainder. You’ll need to check your savings account interest rates to see if the switch will be worthwhile.

How to achieve the best mortgage rates in any situation

With so many mortgage rate options, taking any opportunity to get the best deal from lenders is crucial. Here are a few suggestions that could provide better deals with a little investigation and effort.

Check your affordability

Despite mortgages being primarily driven by salary, lenders need to know how much you can realistically afford to pay each month.

Most mortgage calculators suggest higher and more attractive loan amounts based solely on your income. With the final applications, lenders make allowances for outstanding loans and credit card balances, typical travel expenses, regular bills, and living costs to calculate how much money you’ll have left over each month. As a result, the suggestions made by mortgage calculators can vary significantly from what you can actually borrow.

Carrying out an affordability assessment with a mortgage advisor or broker will paint a far clearer picture. It can also show you where you can cut down, leaving more money available for your mortgage, making you more attractive to lenders for better rates and terms.

Consider your interest rate options

Depending on the market, a tracker rate is often the best option in a stable market. A fixed rate is likely a little higher but offers security against sudden fluctuations when the market changes or becomes unstable.

Maximise your credit rating

Lenders examine your credit report to determine your risk level and how you manage your money. Anything you can do to lower your credit rating can help you achieve better rates or offers.

Be sure to include all the fees

Several fees come with a mortgage, and they can affect the deal's total cost considerably. Make sure that the savings you stand to make from a lower interest rate are greater than the set-up and administration costs. You should factor them into the duration you plan to hold the mortgage, including repayment charges if you plan to remortgage or pay the loan amount off.

Consult a trusted mortgage advisor

A mortgage advisor or specialist broker is a valuable and experienced partner while exploring your options.

They’ll help put your applications together, including creating an affordability assessment. They’ll advise you on your best options and which lenders are ideally suited to people in your position. Finally, they’ll deliver a selection of available products comparable with the best mortgage rates (UK) for your situation.

Better still, their fees are often substantially lower than the money they save you.

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