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Published on : February 25, 2022 11:34

How To Find The Best Deal On Your Next Mortgage


Taking the next step on the property ladder is an exciting prospect. Much like becoming a first-time buyer, it requires significant financial input, and you may have to do so with a brand new mortgage. It is important to find one relevant to your circumstances, and we want to show you how to find the best deal on your next mortgage.


The financial commitment typically involved with moving up on the property ladder is typically larger than when becoming a first-time buyer.

Much like when buying your first home, you may require the use of a mortgage to purchase your next property. With each type of mortgage differing in numerous ways, it can be tricky to compare deals and find the best rates.


Comparing mortgage deals by interest rates


When you’re comparing mortgages, the interest rate is one of the most important factors. It can make a huge difference to your monthly and annual payments, as our mortgage interest calculator shows.

Lower interest rates will save you money, but it is important to ensure you pick the right type of deal first. Mortgages tend to be categorised according to the way their interest rates work. These mortgages consist of:

  • Fixed-rate mortgages

More information on these types of mortgages can be found in our home movers’ guide to mortgages.

Interest rates aren’t the only thing you’ll need to consider when comparing mortgage deals. Fees can make a big difference, too, and there are several different types you should watch out for.


What are mortgage fees?


  • Arrangement fees – Also known as booking or product fees. These are paid to the lender for setting up your mortgage. They can vary between providers, ranging from free or into the thousands. Rather than a flat fee, some lenders charge a percentage of the amount you’re borrowing.
  • Valuation fees – Your lender will need to conduct a valuation to check the property is worth what you want to pay for it. If they deem the property well under what you want to pay for it, then they may not loan you the mortgage.
  • Legal fees – These fees are charged to sort out the legal particulars when setting up a new mortgage or switching deals.

Some lenders offer fee-free deals, but the mortgages with the cheapest interest rates usually come with hefty up-front fees.

It can be possible to add arrangement fees to your mortgage balance, but this usually isn’t advisable, as you’ll then need to pay interest on them.

What are the average mortgage valuation fees?

Fees can fluctuate throughout the home-buying process and vary between loan providers. The valuation fee can sit between the bracket of £250 – £1,500, dependent on the value of the property.


Consider ERCs (Early Repayment Charges)


Up-front fees can add to the cost of borrowing, but early repayment charges (ERCs) could sting you further down the line if you choose the wrong fixed term on your mortgage.

ERCs are generally charged on fixed-rate mortgages of five years or longer, and they mean that if you decide to pay off the mortgage early (including by moving home and taking out a new mortgage), you may need to pay thousands in charges.

ERCs can be as much as five per cent of the balance in the first year of your mortgage, before dropping each year thereafter.

It’s a cost to be wary of and factor into your mortgage deal should you find yourself in a position to make an early repayment.


What are APRCs?


When you compare mortgage deals online, you’ll usually see a column called ‘APRC’.

A mortgage deal’s annual percentage rate of charge (APRC) is a calculation of how much you’d pay if you stuck with the deal for its entire term until you’ve paid off the mortgage in full.

This means the APRC incorporates the initial rate and fees but also the SVR, which you’d be moved onto at the end of the initial deal period.

While it can be interesting to see how deals compare on this measure, the APRC won’t be that useful if you’re planning to remortgage when your initial period ends – which you almost always should.


Banks vs building societies: who offer the best rates?


When it comes to mortgage-hunting for their next home, many homeowners start by talking to their current mortgage provider, whether this a bank or a building society. It would be a lucky and unusual coincidence if your current mortgage provider were able to offer you the best deal again, particularly if you borrowed your first mortgage through your bank.

In fact, it’s often not banks offering the best deals at all, but building societies – and they’re sometimes ones that you won’t see on your local high street. You can also find that tailored niche lenders offer better rates than anyone on the high street.


How can I find the best deal on my next mortgage?


  • Save up a large deposit. A larger deposit will give you access to better rates. If you are in a position where you have paid off your first mortgage prior to selling your current home, then the funds from this sale should contribute a large quantity to a deposit.
  • Don’t spend more than you can afford. It goes without saying, but you shouldn’t bite off more than you can chew. UK banks and building societies carry out affordability checks before offering you a mortgage to ensure you can comfortably keep up repayments.
  • Research thoroughly. That means more than trawling through Zoopla and Rightmove until the early hours. If you spot a mortgage with an incredibly low-interest rate, keep an eye on the fees. If you’ve not lived in the area in which you want to buy, check commuting time and costs and local crime stats.
  • Read the small print and think long term. Bagged a mortgage with a great rate? Have a look at overpayment charges and early exit fees which could sting you later on.

Edward Mellor’s in-house mortgage experts have helped countless first-time buyers, giving them the peace of mind they deserve when looking for a mortgage. With access to thousands of products across over 50 high street and niche lenders, we can source and tailor the best mortgage rates for your circumstances, and guide you through the process in a hassle-free manner.

To speak with one of our in-house mortgage advisors, give us a call on 0161 826 2998 or click below to book a free consultation:

Book your Mortgage Appointment today

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