The mortgage interestrate that you are ultimately going to be charged will be a major factor in deciding which mortgage you will take out and also, which mortgage lender you will go to for your new load. The mortgage interest rate that you are going to be charged on your loan will dictate, for the next few years at least and maybe a lot longer, how much the mortgage is going to cost you each month. It will determine how much of your monthly budget will be being spent on repaying your mortgage and, therefore, how much of your income is available for you to spend on other regular bills and leisure time.
But what factors will be affecting the mortgage rates that are available to you from the various lenders? For a start, the type of mortgage that you are interested in will dictate what the bank will offer to you. If you compare best mortgage rates for fixed and standard rates, you would usually find lenders offering special rates on their fixed rates making them less than their standard rate mortgagess. This is the incentive offered in order for you to approach the bank and take out a mortgage with them. Later, when you have passed the initial cheap phase of the mortgage and the incentive is approaching an end, your bank is hoping and expecting that you decide to stay loyal and take the easy option and not remortgage to a better deal within the lender, or worse still, move to a new bank.
The length of your selected incentive period will also dictate, in part, the actual mortgage rate that you are being charged. For example, you may get from your lender a very low fixed rate mortgage if you only fix it for 6 months, but a slightly higher interest rate if instead you are trying to fix the mortgage rates for 5 years. Tied into this, there may be a lock in period once the incentive offer has ended, during which you are forced onto the lender’s standard variable rate mortgage product. This time, typically the longer the lock in period that follows the incentive, the better the incentive rate that you will be offered at first to draw you in.
How much you are able to put down as a deposit may also affect the mortgage interest rate that you are offered. For example, if you are unable to put down at least a minimum of a 25% deposit on your new home, then you might find that the interest rate jumps up by a significant quarter or even half of a percentage point as an insurance policy against you defaulting and owing them a lot of cash.
Trying to compare mortgage interest rates on your own is a difficult task and can be costly if you get it wrong. It can be much easier with the assistance of a mortgage broker and much safer than reading around websites to find the best offers, and it might save you a small fortune if you can take advantage of some free expert advice.
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