How to find a good mortgage deal?
|Borrowing | Mortgage
Asked by TinyTears, submitted
07 August 2011.
My son is very close to buying his first property and although he has already been offered a mortgage in principle with Santander, he has heard there are better offers out there and I wondered if you could advise me where to start looking to see if he can get a better deal before he signs on the dotted line.
Answered by Justin on 08 August 2011
There are two main sources for finding 'best buy' mortgages.
The quickest is to take a look at the various comparison sites on the web, such as Moneyfacts, Moneynet and Moneysupermarket etc. These types of site sometimes give more prominence to the companies that pay them the highest commissions, but look carefully and you should be able find the best general deals currently available.
The alternative is to use a mortgage broker who'll (in theory) shop around for you to find the best deals. They typically receive 0.35% sales commission from the lender if you take out a mortgage through them, but this shouldn't affect the rate you're offered versus going direct. Beware that some mortgage brokers charge a fee in addition to the commission - I'd avoid these.
I'd start by finding the best deal you can on the web, then try calling a broker (e.g. London & Country Mortgages) to see if they can better it - brokers sometimes get exclusive mortgage rates for their clients.
Note, when comparing mortgages your son should take account of any application fees and ensure he can redeem the mortgage, without penalty, after any discounted or fixed rate periods have ended - allowing him to shop around for a better deal in future if need be.
A key decision for your son is the type of mortgage he should opt for. Interest rates look set to stay low for at least another year or two (the economy is probably too fragile for the Bank of England to risk raising rates) so I wouldn't be averse to a tracker mortgage or discounted variable rate. Fixed rates have come down recently, so are not out of the question if he'd prefer peace of mind against any shock rises, but this route will likely prove more expensive overall (assuming interest remains more or less where they are).
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