Almost all of us will know how much our mortgage costs us each month, but more than four out of 10 people don’t know whether their interest rate is competitive or not (Source: Ipsos MORI)
If you’re one of them, there’s a chance that you could be paying more than you need to.
The same study shows that older people are more aware of the best mortgage rates on the market, with:
- 77% of 55-75-year-olds were aware of the best rates
- 62% of 35-44-year-olds were aware of the best rates
- 42% of 16-24-year-olds were aware of the best rates
The lack of understanding among young people is particularly worrying. Younger generations who are trying to get a foot onto the housing ladder will need every bit of help they can get.
Why is it important to stay savvy?
The average first-time buyer in London paid a deposit of £106,577 during 2017, according to Halifax. With so much pressure to save toward a deposit, finding the right mortgage for you will ensure that all that hard work doesn’t get undone by a mortgage that costs you more than it should.
When you move, or take out a new mortgage, you will likely have a better understanding of your mortgage deal and interest rate. However, as time goes by, it’s easy to lose track. After all, we all have more exciting things to do than regularly checking how our mortgage rates compare, right?
It’s all about balance. Whilst checking how lenders compare every week may be overkill, looking into it every couple of months could ensure that you are getting the best deal possible.
The first step is finding out what rate you are paying, which you can do by calling your lender.
What makes a mortgage rate competitive?
You can shop around and make up your own mind, taking into consideration these factors:
Different mortgage types: Knowing what each mortgage type means and how they differ from one another gives you a better insight into how much you will pay each month.
Different loan amounts: You might not have much choice over how much you need to borrow, but some rates can look attractive, until you compare it with a higher or lower amount. Make sure you know what mortgage type is suitable for different sizes of loan.
Interest rates: This is the first thing you will be drawn to. Of course, lower interest rates will draw you in, but don’t forget to take other factors into account.
Initial terms/offers: Beware of entering into a deal which will lapse in a year or two. Make sure that you know how long your current rate will last, and make sure to start shopping around in advance to avoid the default (and higher) rates.
Alternatively, you could let a mortgage broker take care of the hard work for you.
Why seek advice?
Whether you’re looking to renew your existing mortgage or start afresh for a new home, a little professional input can go a long way.
It can be easy to carry out a one-off scan of the market, choose a product that looks good, and stick with it for years. However, whilst you sit back and enjoy those great rates, another provider could be making waves and offering an even better deal.
Staying on top of the best mortgage rates is not a one-time chore. You really need to be checking your mortgage against the competition at least once each year.
A professional broker lives and breathes mortgage advice. They know the market inside and out, making it their duty to be up to date on all the latest developments and products. That means that, instead of having to catch up with a whole sector every six – 12 months, you can simply call someone who already has that knowledge and is ready to help you make the best decisions.
You can do this research yourself, but we’d be happy to help… feel free to get in touch with us on 0207 808 4120.