Mortgage comparison: a beginner's guide

Getting a mortgage is, for most people, the biggest financial commitment they will ever enter into in their lives.

So, understandably, when faced with all the possibilities, finding the right mortgage for you can seem like an impossible task. Mortgage comparison, however, need not be the long, dull and confusing process it appears to be.

The first thing that it may be advisable to do before applying for mortgage quotes is to decide roughly which kind of deal you want, or at least be aware of what the different options are. Is it repayment or interest-only? Fixed or variable interest rate, or maybe a discounted variable rate? You may find flexible or lifestyle mortgages useful if it is likely that you need to take a payment holiday, or make extra payments when you have the money to do so. It’s a good idea to read up on these terms and decide roughly where in the mortgage market you need to look.

Once you have narrowed down your mortgage options to two or three types, it’s time to start applying for and comparing mortgage quotes. It is advisable at this stage to remember to look at what is known as the “true cost” of each mortgage. It is often said that simply comparing the monthly repayment amounts or interest rates of mortgages can be deceiving, as tempting offers like this can hide other fees that can outweigh the benefits of low rates or monthly repayments. Extra payments can include early redemption penalties, arrangement fees and higher lending charges; it seems that successful mortgage comparisons include looking at these extras.

Comparing multiple mortgage quotes

Modern technology, as always, speeds up the mortgage comparison process and websites can provide you with all the mortgage quotes you need almost instantly. You may wish to use a comparison site before meeting a mortgage broker or lender to get a good idea of prices.

Whilst mortgage comparison sites can make researching prices easier, it is important to use the right one. It may advisable to use comparison sites that are “whole of market”. This means that the site searches through all possible mortgage products, rather than only the products that site earns commission from. If all of the options are still too complicated or time-consuming to manage, you may want to use a mortgage broker to obtain mortgage quotes. Mortgage brokers can use their expertise to get you the best deal, and occasionally find clients exclusive deals that are unavailable elsewhere. A good tip here is to consider whether or not you would like to pay your mortgage broker for their work yourself (a fee that is normally around £400.00) or allow them to take commission from the lender instead.

Last, but not least, keep an eye out for attractive extras mortgage lenders might throw out to tempt you in. These include free legal fees, a cash rebate, or even free insurance for an agreed period of time. Sometimes these extras can work to your favour, but you may want to read the small print before making up your mind.

Steven Clarke – Marketing Manager – The Mortgage Broker – Providing a mortgage comparison of the whole mortgage lender market to find you the best mortgage loan rates. Visit the Mortgage Broker to get a quote on the type of mortgage you want.