Author: Catriona Singfield

Searching for mortgage information these days has never been easier – if all you are looking for is another advert promising you the best, simplest, cheapest, most wonderful product ever! How do you unravel the meaning from all these fantastic claims?

Not to worry – help is at hand! Here we sort out the different mortgage types from each other, and offer some advice on choosing the best one for your needs.

We begin with that first-time favourite, the discount variable rate deal. The good side is that this mortgage has an interest rate tied to follow the company’s standard variable rate, and also offers a cost reduction. The downside of this particular variable version is just that: it varies and may therefore rise unexpectedly.

A slightly different type, the tracker variable rate, is also tied in but this time to the base rate. Tracker rates change only when the base rate changes – and this rate is set by the Bank of England, which may give more stability. Trackers are a friendly face in the mortgage jungle, being simple in concept and easy to understand. They are also available in two variants, short term and lifetime.

A common way to try to make sure you stay with the best rate out there is to re-mortgage after a favourable deal ends. This is a sound idea, as long as you manage the all-important timing just right. You also need to find a new deal that matches (or betters) your old one. If you don’t make the change fast enough, you can end up paying the lender’s standard variable rate instead. It can be a useful strategy, but you’ll want to remain open to switching to a good longer term deal if one comes around.

Speaking of long term, it isn’t necessarily the case that a longer duration means a worse rate. Look into your options carefully. Additionally, some borrowers actually prefer to have a longer term plan in place, especially if they were used to making regular rent payments of a fixed amount.

Longer term mortgages can be worthwhile too if you are considering a repayment mortgage. This type reduces the capital you owe over time, as you make payments. If you find the inconvenience of searching around for a good mortgage deal every couple of years troublesome, then investing in a sound long term package could be your answer. And the amount you’d save by changing is often not that large.

Another mortgage sweetener often used to attract new buyers is the cashback mortgage. It can seem tempting to have a cash-in-hand sum, especially when there are a host of things you’d like to do to get your new home just as you’d like it. But beware! Just like many welcome gifts, it often comes with a less impressive interest rate attached. There is a longer tie-in period too – the length of time before you can change to another mortgage without paying a fee. Worst of all, if you do switch, your cashback may have to be repaid!

There are low-fee deals on offer. These may come with no arrangement fee, but with a correspondingly higher interest rate. Consider if over time, it would work out cheaper for you to pay the fee. Remember: there are no free features with a mortgage! It’s also quite possible that the fee can be added to the mortgage total anyway, softening the blow.

It’s a slightly different case if you are offered a free valuation, or free legal work, as these are incentives which will actually reduce costs you’d otherwise have to pay. But as always, check the interest rates carefully. These are the main feature of any mortgage.

So what’s your best avenue for up to date market advice and tips? An online broker is trained to look for exactly what you need, and can match your requirements with the very latest and most economical deals. They can also sometimes find special discount mortgages that are only available via the Internet.

It makes sense to look at the ever-changing mortgage market from all angles. Your knowledgeable broker is your best ally, so make sure they work for you and find that fantastic new deal!

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