Property expert on how to bag the BEST mortgage deal in today’s market
Finding a good mortgage deal in today’s market demands more than just comparing rates.
While the average 2-year and 5-year fixed mortgage rates have gone down this year, they’re still higher than rates pre-pandemic.
This means those in their current homes will have to pay more than they once were each month, and new buyers won’t be able to afford the size and location they once would’ve.
With January being, typically, a month where a lot more homes go on the market, and more sales happen, Gareth Tucker, property and mortgage specialist at Pure Property Finance, shares five insider tips to help savvy homeowners unlock the best possible value for them.
Product transfers instead of starting fresh
“It’s very rare that you’ll purchase a property right at the end of your fixed-mortgage rate. If you’re a new buyer, rather than switching lenders when your current deal ends, consider a product transfer.
These transfers can avoid things like additional fees and extra admin. However, you’ll need to check whether your current lender will lend for the new property, and properties that are worth less may mean that the LTV might be restrictive.”
Crunch the numbers on mortgage fees
“Many low rates that you see in the press come with hefty product fees. According to research, the average fee today is around £1,129, which is up £89 since 2020.
You need to compare the total cost, including arrangement, legal fees, valuation, survey costs, rather than just look at the stand-alone monthly payment percentage.”
Know when break fees apply
“If you want to exit a fixed-rate deal early, then check for any early break fees and early repayment charges.
These are calculations based on the remaining period, interest rate gap and also, lender costs. Some lenders may lend them if market rates have risen above your fixed rate, but smart timing can save you thousands.”
Match your deal length to your expectations
“Choosing the right deal term is absolutely key to avoiding additional penalties. Shorter fixes may offer more flexibility, especially if you’re somewhere where you know you’re not going to be staying much longer. However, longer fixed rates can lock in stability if rates rise again. However, don’t lock into a five-year mortgage if you’re planning on moving at that time, as early exit fees might be more than the additional 0.1% interest you end up having to pay each month.”
Check for any green mortgage incentives
“Some lenders now offer ‘green mortgages’, which is a term we’re definitely hearing more of in the property market. These are usually discounted rates or cashback if your property meets certain energy efficiency standards. According to UK Finance, the uptake of green mortgage products grew by 18% last year, and these deals can often save homeowners hundreds, while also boosting property value.”
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