What criteria do you use to compare mortgages?

w00519772

I want a five year fixed deal. I looked for the best three deals I could find on Money Supermarket and then went to a broker (who could not better them). Therefore I had three deals to compare.

I simply looked for the cheapest over the five years i.e. I looked for the monthly charge and multiplied it by 60 (60 months in five years) and then added all the fees e.g. arrangement fee etc.

The best deal is with the Post Office, which is a subsidiary of the bank of ireland. The other two deals were with very well known high street banks.

Is there any other criteria that people use when assessing mortgage options? e.g. APR? Would you choose a well known high street bank even if less well known banks had lower rates?

I asked a similar question here: https://forums.moneysavingexpert.com/discussion/4903971. The question was slighly different and hence the reason for a new question.

theartfullodger

The comparator I use is what will they each cost me in total over five years (or 3 or 10 - you choose..) with all charges, fees, premiums, whatever.

Others will have other tests.

How do you compare (say..) between women, or between men ??? There's no one good answer.

SG27

w00519772 wrote: »

I want a five year fixed deal. I looked for the best three deals I could find on Money Supermarket and then went to a broker (who could not better them). Therefore I had three deals to compare.

I simply looked for the cheapest over the five years i.e. I looked for the monthly charge and multiplied it by 60 (60 months in five years) and then added all the fees e.g. arrangement fee etc.

The best deal is with the Post Office, which is a subsidiary of the bank of ireland. The other two deals were with very well known high street banks.

Is there any other criteria that people use when assessing mortgage options? e.g. APR? Would you choose a well known high street bank even if less well known banks had lower rates?

I asked a similar question here: https://forums.moneysavingexpert.com/discussion/4903971. The question was slighly different and hence the reason for a new question.

Check what the SVRs are too. If they are pretty similar overall costs then go with the on that has the lowest SVR.

kingstreet

... and as answered in the duplicate thread on M&E, the outstanding balance when the deal ends.

Better_Days

May be worth finding out how long on average each provider is taking to process applications to see if that has any impact on your planned time-frame. Also you could consider the customer service reputation of each provider. You could ring up each on your short-list with a query and see how they deal with you. House buying can be very stressful and a mortgage provider that fiddles around wont help.

I got my mortgage through First Direct and it was great being able to ring them up and get through straight away to the mortgage team who were knowledgeable and helpful. The only difficulty I had was that they decided to review the mortgage between exchange and completion (but that's another story!)

Katgrit

Here's how I decided.

I looked at two things only:
Me, and how much it would cost AFTER the five years.

1) ME. I know me too well. I know that come the end if the fixed rate I would never get round to remortgaging at the end of the fixed rate. Had one very perplexed "inhouse" mortgage adviser say "But its very easy, we'd just post you the paperwork for you to sign and post back". My reply "Nope, it won't happen. I won't get round to it". So I decided to look at costs over the longer term, ie SVRs.

2) Historical SVRs. Yes I know its not a crystal ball, but a good indicator. Lowest over the 10 years prior to me buying where I think Nationwide and Halifax, so I went to both of those for quotes. Nationwide wanted a 5% deposit, and Halifax 3%. only looked at mortgages from those two providers. Halifax had bigger upfront fees, and I was struggling to save as house prices were rapidly increasing, so Nationwide it was. My mortgage was only for £42,000 (in 2003) so the difference between various products was only about twenty quid.

11 years later I'm never changed. Have ported (about to for a second time) and borrowed extra, but my long term low SVR plan has worked.

Ask yourself if you can be bothered with renewing a deal after your fixed term. If the new product has a £1000 arrangement fee will you have this money to spare? Will the decrease in new payment amount be enough over the new fixed term period to warrant paying a new arrangement fee? (eg, new deal saves you £10 per month over the 3yr fixed period = you save £360. If the arrangement fee is more than this its not worth renewing).

I just thought long term and took into consideration that despite good intentions I'm a lazy rip.

w00519772

Katgrit wrote: »

Here's how I decided.

I looked at two things only:
Me, and how much it would cost AFTER the five years.

1) ME. I know me too well. I know that come the end if the fixed rate I would never get round to remortgaging at the end of the fixed rate. Had one very perplexed "inhouse" mortgage adviser say "But its very easy, we'd just post you the paperwork for you to sign and post back". My reply "Nope, it won't happen. I won't get round to it". So I decided to look at costs over the longer term, ie SVRs.

2) Historical SVRs. Yes I know its not a crystal ball, but a good indicator. Lowest over the 10 years prior to me buying where I think Nationwide and Halifax, so I went to both of those for quotes. Nationwide wanted a 5% deposit, and Halifax 3%. only looked at mortgages from those two providers. Halifax had bigger upfront fees, and I was struggling to save as house prices were rapidly increasing, so Nationwide it was. My mortgage was only for £42,000 (in 2003) so the difference between various products was only about twenty quid.

11 years later I'm never changed. Have ported (about to for a second time) and borrowed extra, but my long term low SVR plan has worked.

Ask yourself if you can be bothered with renewing a deal after your fixed term. If the new product has a £1000 arrangement fee will you have this money to spare? Will the decrease in new payment amount be enough over the new fixed term period to warrant paying a new arrangement fee? (eg, new deal saves you £10 per month over the 3yr fixed period = you save £360. If the arrangement fee is more than this its not worth renewing).

I just thought long term and took into consideration that despite good intentions I'm a lazy rip.

thanks. It was interesting what you said about porting. Five years is a long time. Was it a lot of hassle?

Katgrit

w00519772 wrote: »

thanks. It was interesting what you said about porting. Five years is a long time. Was it a lot of hassle?

My fixed rate was only for 2 years. I ported at 7 years taking out some extra borrowing and hopefully this year at 11 years. Porting was effectively the same as applying for a mortgage first time round, they just worked everything out with my current rate. It certainly wasn't any more hassle. Can't remember the finer details - I've slept since then!

After the initial 2 years my monthly payment actually went down. Friends thought I was mad going for a higher initial rate rather than taking one of the discounted products that were being offered by other banks, but my long term low SVR plan worked. I paid a tenner-ish more for 2 years and now I've got a great SVR. If I'd picked a mortgage with a lower initial rate but higher SVR I wouldn't have got round to remortgaging til I moved, so would have been 5 years of higher payments.

I think many people would think this is a very backward way of looking at it, and somewhere hidden at the bottom of an excel spreadsheet it may not actually be the best financal advice. But to me and my lazy !!! it made sense!

getmore4less

Really simple if the terms are the same.

add the fees.
make the monthly payment the same.
check what's is owing at the end of term.

Smallest amount owing is the cheapest UP TO THAT point.

then you have to look at follow on rate and exit fees for the next step.

Katgrit

Another good reason for NOT going for a mortgage which you'd be looking to change immediatly after the fixed term is change in house prices.

Bought this house for £125,000 with mortgage of something like £102,000. Prices in this area fell and so after 2 years it was only worth £105,000 ish. If I'd have gone for a "low initial rate" product I wouldn't have been able to remortgage with such a low LVR. So I'd have been stuck with a different banks higher SVR. As it was, again the rate actually dropped (on the additional borrowing bit) so I was safe. If I'm not explaining this very well I apologise!

w00519772

thanks. Are you saying that the svr and reputation of the bank is more important than the cost over the fixed period?