Mortgage Comparison Checklist

On the road to securing your ideal mortgage, a meticulous market comparison is mandatory. After determining how much you can borrow, the next step is to compare mortgages from as many lenders as possible. Interest rates, overall borrowing costs, repayment flexibility – all to be taken into account.

So to help you find the best deal, we’ve created a simple mortgage comparison checklist for experienced and first-time property buyers alike:

  1. Repayment or interest-only mortgage

The two primary types of mortgage available are repayment mortgages and interest-only mortgages. A repayment mortgage is the more typical of the two, in which you’ll pay instalments towards the total balance of the loan each month. With an interest-only mortgage, your instalments simply cover the interest, with the remaining balance to be paid at the end of the mortgage term.

  1. Fixed vs flexible interest rates

You’ll also need to decide whether to apply for a fixed-rate or variable-rate mortgage. As the name suggests, fixed-rate mortgages attach an interest rate that is guaranteed not to change for the life of the loan. By contrast, variable-rate mortgages have the potential to become cheaper or more expensive over time, depending on what happens with base-rate interests rates from one year to the next.

  1. Compare mortgage rates from multiple lenders

Working with an independent broker is perhaps the best way of carrying out a complete mortgage comparison. Rather than going directly to one specific lender, it pays to compare the market with the help of an independent specialist.  While shopping around, ensure that the deal you choose is one that suits your long-term objectives and current financial position.

  1. Consider specialist lenders

While carrying out your mortgage comparison, you may find the specialist lenders are able to offer you a better deal than their major High Street counterparts. Depending on your financial status and credit score, a specialist lender may be able to offer you a mortgage at more competitive rates of interest and with lower overall borrowing costs. Once again therefore, a good reason to compare the market through an independent broker.

  1. Early repayment

You may wish to repay the balance of your mortgage early, in order to clear the balance and save on long-term interest payments. Nevertheless, this is something you’ll need to consider at the time you apply for the loan. Early repayment options are usually non-negotiable once the loan term has begun.

  1. Payment breaks

Many mortgage products also allow the borrower to take planned or unexpected payment breaks, should their financial circumstances change temporarily.  Again, this must be factored while carrying out your mortgage comparison, as it typically cannot be bolted-on at a later date.

  1. General eligibility

Last but not least, you need to carefully consider your eligibility as you compare mortgages from competing lenders. These days, simply applying for a loan you’re subsequently denied can have a devastating impact on your credit score. You therefore need to think carefully about your eligibility or otherwise, before completing and submitting a mortgage application.

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