When you first start thinking about getting a home and a mortgage, it can be very tempting to look online or in the papers and consult the seemingly endless eye-catching “best buy” tables that are out there.

We get it, these are easy to understand and often a neat list of low interest rates that seem too good to pass up. But while these can be a useful starting point, a true mortgage best buy comparison involves digging much deeper than just the headline rate. That’s because the cheapest mortgage isn’t always the one with the lowest interest rate. High fees can quickly make a seemingly great deal more expensive.

This guide will walk you through how to properly compare mortgage deals to find the one that’s genuinely the best value for your situation.

 

 

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Beyond the headline interest rate

The most common mistake when comparing mortgages is to fixate just on the interest rate.

Lenders know that a low rate is attractive but they often attach significant fees to these products.

The real goal of a mortgage best buy comparison is to find the deal that has the lowest overall cost during its initial promotional period (e.g. for the first 2 or 5 years).

At the end of the day, when you do the sums, a slightly higher rate with no fees could easily work out cheaper than a lower rate with a hefty £1,500 arrangement fee.

A checklist for comparing mortgage deals

To properly compare deals you need to look at all the components together. Here is a checklist of what to examine:

  1. The initial interest rate
  2. Any up front fees, specifically:
  3. 3. Calculate the true cost over the initial deal period
    Do this with the following calculation:
    (Monthly Payment x Number of Months in Deal) + All Upfront Fees = True Cost.
    Comparing this final figure between different products will reveal the genuinely cheaper deal. For example a low-rate deal might cost you £15,000 over two years while a deal with a slightly higher rate but no fees might only cost £14,500.
  4. Understand the early repayment charges (ERCs)
  5. Check the Revert Rate (SVR) – (Check out our guide – what is a variable rate mortgage)
  6. Look for any added perks
    • Cashback: A lump sum paid to you on completion.
    • Free Valuation: Saves you the upfront valuation fee.
    • Free Legal Work: Often offered on remortgage deals.

Where can you do a Mortgage Best Buy Comparison?

There are several ways to search for deals but some are more effective than others. Here at OneDome you can figure out your best deal with our mortgage passport tool plus you can speak to our team of mortgage brokers and advisors.

Why your situation is the final filter

Remember that the “best buy” deal advertised online might not be available to you. The best deal for you is ultimately the best one you can get. Your eligibility is the final and most important filter in any mortgage best buy comparison.

Always remember, lenders will make their decision based on:

OneDome is here to help

Choosing a mortgage is complex but OneDome is here to help. If you have any questions about the specifics of mortgages, the wider mortgage process or want tailored advice on the different types of mortgages that suit your situation you can:

Important: Your home may be repossessed if you do not keep up repayments on your mortgage.