The mortgage market has significantly changed in the last couple of years. The number of mortgage products available is much smaller than it used to be, 90% LTV mortgages have almost disappeared, and lenders in general are becoming a lot more careful. No longer do they allow mortgages equal to 6 times your yearly income, and for customers with poor credits rating, getting a mortgage has become extremely difficult. Despite the credit crunch, there are still some great mortgage deals available on the market. We give you 7 tips to help you get the best mortgage rates:
1. Make sure you’ve got a large deposit: while 90% LTV mortgages might still be available from some lenders, the best mortgage rates are usually available on less than 75% LTV products. Make sure you save as much as you can for your upfront deposit.
2. Large deposits go a long way for remortgages as well: because of the drop in property prices, you may well find that the LTV for your property is higher than when you applied for your first mortgage. An option could be to use the money in your saving accounts towards a deposit in order to get a better remortgage deal.
3. Check your credit record: the buyers most affected by the credit crunch are people with bad credit, also known as “sub prime”. If you’ve got bad credit, the rates available to you will be significantly higher as the lenders want to protect themselves against the risk of lending money to somebody with a poor credit record. Make sure you check your credit record and take corrective steps to bring back things on the right track.
4. Speak to a professional mortgage adviser: If you have got a special situation, for example if you’re self-employed, it is really important that you speak to a mortgage adviser. A good mortgage adviser will work with you to understand your personal situation and find out the best products available for your circumstances.
5. Go for fixed rate products if you want security: fixed rate mortgages guarantee that your mortgage repayments will stay the same and will not fluctuate with changes in the Bank of England interest rate. This security comes at a price though, as fixed rate mortgage deals are generally less competitive than variable rate products.
6. Choose a tracker mortgage for the best rates: tracker mortgages rates fluctuate with the bank of England base rate. The rates offered for tracker mortgages are in general lower than fixed rate mortgages. There always the risk though that the base rate could go up and result in higher mortgage payments if you choose a tracker mortgage.
7. Be careful with the arrangement fees: the best mortgage deals sometimes come with high arrangement fees. It is important that you calculate the cost of the mortgage over the entire term, taking the arrangement fees into account, to find out what is the best mortgage deal for your situation.