Best Mortgage Deals
If you are looking for the best mortgage deals or remortgage deals at the moment it will pay to keep your wits about you and get out your calculator. What you’ll find is that most lenders are offering fixed rates or more commonly a fixed rate followed by a discounted rate. Add fees into the equation, many of which are around 2% and working out what the best mortgage deals are becomes difficult.
You need to compare like with like to work out the best mortgage deals or remortgage deals for you, but first a little general info:
For first time buyers, whereas 18 months ago you could get away with the odd small credit problem on your credit file and no deposit; today you are generally going to need a clean credit record and a 15% deposit. A few lenders are offering 90% mortgages, but you may find that they accept very few lenders at this ltv level.
For remortgages, again most deals start at 85% ltv with the best mortgage deals reserved for mortgages under 75% loan to value. There are some great remortgage deals around if you have at least 25% equity in your property, many of which include a free valuation and free legals. One thing that is catching people out here is that they don’t have a realistic idea of the current value of their property. As has been widely reported, property values as an average are down by 16% from a year ago, however new build properties, particularly flats have dropped in value by considerably more.
To work out which are the best mortgage deals for your situation, you first need to work out your loan to value (ltv) which is simply the amount that you need to borrow divided by the value of your property. So for example, if you require a mortgage of £150,000 and the property value is £200,000 your ltv is 75%.
Now decide on the time period for your mortgage deal (not the term of your mortgage itself, just this deal). Often you’ll find that the cheaper deals in terms of monthly cost are over two years, however you need to factor in that you’ll probably have another set of costs to deal with after the two years is up. Generally that doesn’t work out to be very cost effective, so I’d recommend looking at deals with a term of 3 to 5 years. Make sure that any deals you are considering do not have extended redemption penalties which tie you in to the lenders standard variable rate for a period of time after the deal ends.
Once you’ve made that decision, calculate the total payments including any fees (don’t forget conveyancing fees if there is no free legals package) over your chosen time period. Compare these totals to find the best mortgage deals.
