Everyone wants to spend less on their mortgage repayments. But how can you make sure you get a great deal?
Here are five tips for getting the best rate on your mortgage:
1. Check your credit score
Before lending to you, banks and lenders will check your credit score to measure how risky you are as a borrower. The information in your credit report will be used to assess your financial track record and how reliable you are.
Having a higher credit score usually means you can get better mortgage deals with lower interest rates as you’re more likely to pay on time.
If your score is low, start by checking your report and fixing any mistakes. Other steps you can take to increase your score are registering to vote, paying off any debts, especially defaults or court judgements, and avoiding missed payments.
2. Pay a bigger deposit (if you can)
Paying a larger deposit means you borrow less money and reduce your payments. But, it also means that you can get a lower mortgage rate, as you will be perceived as lower risk.
Most of the best deals are given to those with a 40% deposit or more. You can, however, find good deals with a deposit of 20-25%, which is more realistic for many buyers.
3. Do your research
When people take out mortgages, they usually start by checking with their bank. And, although some banks do give lower rates and loyalty bonuses to existing customers, you still might be able to get a better deal elsewhere.
It’s important to always carry out thorough research before taking out a mortgage. Check with different lenders, brokers and comparison services to check you’re getting the best deal for your circumstances. After all, a mortgage is a huge financial commitment!
4. Check for extra fees
Next, while it’s a good ideal to consider the rates and monthly repayments, don’t forget to check other factors that could affect the cost of your mortgage, like additional fees and charges.
Most lenders charge extra administration fees, like an arrangement fee, overpayment fee, or early repayment fee. Make sure you check these first, as these extra costs may outweigh the benefits, like having a very low interest rate.
5. Try to keep your options open
Lastly, remember to try and keep your options open as much as possible. You might be able to get a better deal later on by remortgaging, and this isn’t something you want to rule out.
Although remortgaging isn’t always the smartest move, as it can cost a lot of money, always check in advance to see how much it will cost and what your options might be.