If you're looking around for a mortgage, you probably know it's a complicated job comparing all the different deals. There are basically two ways to compare mortgages:
1) Sift through the many different APRs and short-term rate offers, pore over the small print, add up the fees, and get ready for some complex comparisons.
2) Get help from an impartial adviser, who compares all the available mortgages for you with expert knowledge.
The Ins & Outs of Comparing
During the housing market boom of the last decade, many more lenders have started competing for a share of the UK mortgage business. If anything, the problem for today's mortgage shopper might just be too much choice. There are literally thousands of different mortgages available (over 6,000 at the last count). Says Julia Harris of eMoneyfacts.co.uk:
"The number of mortgage products offered by some lenders is more than enough to baffle the average man on the street. However, with the help of a financial adviser and a decent sourcing system, there is a rate and fee combination out there to suit every situation."
APR Rates vs. Fees & Conditions...
The idea of "Equivalent APR" interest rates is supposed to make it easier to compare the different deals. However, in practice it's just not as simple as comparing APRs, because mortgages differ in lots of other ways too:
• Tie-in periods – especially for discount or fixed-rate mortgages, with associated Early Redemption Fees;
• Arrangement Fees – these can make a huge difference, since they vary from under £200 to over £4,000 (often charged as a percentage of the overall loan);
• Loan-To-Value ratio – what percentage of the purchase price they will lend you, or in other words, how much you need for a deposit;
• Credit Scoring – how strong a rating you need in order to get the lowest rates, or whether they will consider applicants with minor defaults;
• Other qualifying criteria – e.g. the type of property allowed (some mortgages exclude certain types of flats!)
• Special features and benefits – for example: flexibility on repayments, building society members' reward schemes; or in the case of offset mortgages, banking services as well.
Comparing Mortgages – The Easier Way...
It's wise to look around the whole lending market if you want to compare mortgages thoroughly. An FSA-qualified adviser can do this hard work for you, and they are legally bound to act in your best interests, so we'd suggest giving them a try.
The mortgage quotes they can give you are based on a whole-of-market comparison, and there is no obligation from speaking to them so you can still shop around on your own if you wish.
As a service to our readers, we provide a free call-back service to put you in touch with an FSA-qualified adviser.
» Go to our secure, 1-minute mortgage enquiry form.