March 13, 2012

Compare Mortgage Quotes

Mortgage BrokerComparing mortgage quotes is of course something that we all do, or should do, when taking out a news mortgage. It’s logical that you’re going to struggle to find the best mortgage if you simply take the first one that comes along.

So what are we comparing when we compare mortgage quotes?

Below are some examples of the obvious and not so obvious factors that go into a thorough mortgage comparison.

Comparing mortgage rates

The most obvious thing we compare between mortgage quotes is the interest rate. Naturally a lower interest rate may suggest a better deal. This isn’t always the case though.

Mortgage lenders will quote what’s called an APR with their mortgage balance. This is to help you make a more accurate comparison of the rate over the term of the mortgage, not just the introductory or initial rate which might be low to start with but rise considerably over the term of the mortgage. Comparing interest rates is where a mortgage comparison site can be helpful.

Comparing mortgage products

This is a very important consideration but one that can be overlooked. The risks, upsides and downsides between various mortgage types can change considerably. Take a fixed rate mortgage compared to a tracker mortgage – the fixed rate mortgage may have a higher interest rate when compared to the tracker but you have the peace of mind that the rate won’t rise over the fixed term. The tracker on the other hand could rise or fall which may save you money or leave you exposed depending on the market.

As you can see here – rates not everything, understanding the product type is also very important and you may not be able to compare two products simply by looking at the headline rate.

Comparing lending criteria

So you’ve compared rates, understand the difference between the products and how the rates reflect on this but are you eligible for the mortgage?

Mortgage lenders put tight restrictions on who they’ll lend money to, including:

  • Maximum LTV
  • Restrictions on the type of borrower, ie only remortgage, only current customers, only home movers
  • Min Income
  • Credit rating
  • Employment status

And others…
You need to check you’re eligible for the product before you apply otherwise you could waste money on non-refundable application fees and have unnecessary credit checks performed.

Comparing the whole of the market

Another important one but often overlooked – it’s all very well to find the best deal out of 5 or 6 mortgages, but is it as easy to do so out of 5 or 6 thousand?

There are thousands of different mortgage products on the market at any one time. While they won’t all be applicable it’s difficult as an individual to compare them all or a good number of them without a decent bit of legwork and research. It can be done of course and it can be well worth the effort.

Comparing all the lenders

It’s easy to think of only the High Street banks when considering a mortgage but there are in fact many other types of lenders out there including:

  • Building Societies
  • Friendly Societies
  • Specialist Lenders

In some instances these lenders may have better rates, more accessible products or be able to help in special circumstances.

Comparing fees and charges

Another important thing to think about is the fees and charges associated with a mortgage. While a deal may look great at a glance there may be hefty charges associated with setting it up such as arrangement fees. You may also be subject to exit fees on your current mortgage if you’re remortgaging.

As should be obvious comparing mortgage quotes is not simply a case of comparing one rate to another there are many other aspects to consider. A mortgage broker may be able to help you do this quickly and easily, in most cases they can compare thousands of mortgages and provide you with no obligation quotes. They may also be able to advise you on the best options.