How to Find a Cheap Mortgage
26 Jan 2009 Tell a Friend
How can I get a cheap mortgage rate?
The best way to get a cheap mortgage rate is to, initially, find out what is out there by shopping around on the internet. With hundreds of mortgage lenders all fighting for your custom, you will have a good number of mortgage rate offers to choose from. However, one major consequence of the economic downturn is that lending criteria is now considerably tighter though, so you should be prepared to need a deposit of at least 25 per cent of the total house value if you want to get a great deal on your home mortgage loan.
Your next step would be to consult a qualified mortgage adviser, and narrow down your mortgage options to a shortlist, based on the ones that are the most suitable for your financial circumstances. The final consideration should be based on which mortgage deal from your shortlist offers the most competitive rate, which offer good deals such as a free valuation, and which is the most flexible in terms of early repayment.
How can I get a cheap mortgage?
The base interest rate is set by the Bank of England. Depending on the extent of interest rate fluctuations, the country's entire economy may be affected, as was the case recently when the base rate plummeted to a historic low of 0.5 per cent. Lenders always keep their standard variable interest rate (the 'default' rate that they set) a few percentage points above the base rate set by the Bank of England, and will entice in new customers with products that are closer to the base rate for a set period of time, before the customer reverts to the standard variable rate mortgage.
The base interest rate is reviewed by the Bank of England on a monthly basis, but each individual lending company has to make a decision on how they want to adjust their mortgage rates. Lenders will usually choose to pass their savings on to consumers when the base rate falls, but this is by no means obligatory.
Although the mortgage product range has decreased somewhat in recent years, meaning that cheap home mortgage loans are not perhaps as readily available as they once were, convenience and customer service have been drastically improving as mortgage lenders compete for customers.