How to get the best mortgage rates

[Deleted User]

I’m hoping to buy soon. I’ve spoken to two brokers, one has said the rate is determined by the deposit size and to get back in touch with him when I’ve found a house. Another has provided me with two product options, 1.62% and 1.65%. My LTV is 26%. I’ve seen rates online for the same/ similar product fees and fixed period (5yrs) as low as 1.39%. I don’t have adverse credit, or dependents or car/ furniture payments.

How do you get to the lower interest rates? I’m going to email the first advisor and ask for some idea of what I’d be paying/ could borrow. When I spoke to him last time he said the rate would be determined by the deposit size. I’ve asked the second why the rates are higher than I’ve seen online but not yet had a reply.

ACG

Do you want the lowest rates or the cheapest deal? (There is no right or wrong answer to that btw, it is personal preference). 

Most people want the cheapest deal but I recall a lady wanting to pay a fee in order to save some money each month as she was buying alone and she wanted the lowest repayments possible. 

The lower rates you are finding may come with fees or without other incentives (such as free valuations or cashback). 
Do you want the cheapest deal/lowest rate even if it comes at the price of the lender being fussy and pedantic? 

These are all things your broker will probably be taking into account that you may not be. 

[Deleted User]

ACG said:

Do you want the lowest rates or the cheapest deal? (There is no right or wrong answer to that btw, it is personal preference). 

Most people want the cheapest deal but I recall a lady wanting to pay a fee in order to save some money each month as she was buying alone and she wanted the lowest repayments possible. 

The lower rates you are finding may come with fees or without other incentives (such as free valuations or cashback). 
Do you want the cheapest deal/lowest rate even if it comes at the price of the lender being fussy and pedantic? 

These are all things your broker will probably be taking into account that you may not be. 

Thank you for this. I can’t comment on fussy or pedantic lenders as I do not have that information. Are certain lenders known to be more pedantic or is it more dependent on the relationship they have with the broker?

 I have seen some where with free valuation and with the fee divided by 60 (per month over five years) the monthly payments are still cheaper. 

amnblog

ftbhopes said:

 I have seen some where with free valuation and with the fee divided by 60 (per month over five years) the monthly payments are still cheaper. 

It is not quite as simple as that as you will find the remaining balance at the end of the five year period will differ and this also needs to be taken into account. Go back to your Broker and I suspect you will find you were quoted the best rates for overall costs as opposed to the lowest ones.

jamielutz1987

If you don't mind me asking, what's the size of the mortgage you are looking at?

[Deleted User]

amnblog said:

ftbhopes said:

 I have seen some where with free valuation and with the fee divided by 60 (per month over five years) the monthly payments are still cheaper. 

It is not quite as simple as that as you will find the remaining balance at the end of the five year period will differ and this also needs to be taken into account. Go back to your Broker and I suspect you will find you were quoted the best rates for overall costs as opposed to the lowest ones.

Is that because interest is applied to the product fee? Can this be circumvented by paying the fee upfront?

[Deleted User]

I’ve had another look and I think you are correct. Over the five years it does not work out cheaper to pay the fee for the lower rate! 

amnblog

Assessing a mortgage rate with a fee against a mortgage rate without a fee can be very simple, or sometimes tricky.
Straightforward on an interest only mortgage such as typically used on buy to let, not so on a capital repayment mortgage.
Simply looking at monthly payments does not cut it on a repayment mortgage as the payments include some repayment of capital which needs to be considered.

To find that repayment of capital you can refer to your 'illustrative repayment table' in section 7 of your illustration. If you look down the 'capital paid per instalment' column you can see how much 'headway' you have made on repaying the mortgage at various points. Checking the figure when your initial rate ends will give you a more accurate view to compare rates. This, of course is not something you can do by simply referring to a comparison site or headline product information.

Sometimes of course, where the difference in rates, or the mortgage size is considerable, some simple mathematical calculation is sufficient. A rate of 1.75% over 5 years with a £999 fee against 1.99% over 5 years with no fee on £400,000 borrowing is a 'no-brainer'. The same rates on £125,000 borrowing become marginal.

Brokers have systems that can calculate the 'true cost' between two rates (and should understand the comparison) they are therefore the people to rely on in these cases.

ACG

There is no one size fits all approach to lenders in terms of whether it is better to pay the fee or not, it depends on the rates, the fee, the size of the mortgage and so on. The same can also be the case for lenders especially at the minute - self employed or furlough and some lenders will be fussier than others, but even putting that to one side, we stopped using a particular lender because their systems and processes are a nightmare (a high street bank) - they actually asked for a document which needed a wet signature and could only be posted out the day before completion for example, putting our customer in breach of contract. As it happens we got the lender to wave that request and they completed on the monday, still breach of contract but that was a stressful weekend. 

v.rajput

Hi, I'm looking to borrow £150k(remortgage)
Halifax(current provider) have a 5year fixed at 1.56%..but yet offer 1.35 via LandC, with a few of £1,500.....I don't know wether to hold on a few months, (it's for home improvements/extension)...Can the not Price match lol...stay safe ...

csgohan4

v.rajput said:

Hi, I'm looking to borrow £150k(remortgage)
Halifax(current provider) have a 5year fixed at 1.56%..but yet offer 1.35 via LandC, with a few of £1,500.....I don't know wether to hold on a few months, (it's for home improvements/extension)...Can the not Price match lol...stay safe ...

be careful using best buy tables, they are not always updated and in fact I suspect are a front to get you to call them and effectively a bait and switch

I would rely more on the intermediaries for each lender to double check they are still competitive
Mortgage lenders don't price match, they are not a supermarket. 

Brokers will be your best bet to what you want, however the lowest interest rates don't always mean the best deals, you need to look at the whole package, the fees be it for the product, conveyancing,valuation e.t.c.  Also how quick they can be getting to offer, some are quicker than others, some less strict than others.

I could have got a slightly better rate for my first mortgage but didn't, because our broker knew they would be a PITA to deal with and require sometime which I would rather not waste. 


ACG, that lender couldn't be Barclays coud it:)?