There are effectively two ways you can compare mortgages.

Number 1:

Just find the lowest interest rate and get really excited by how low your monthly payments may be.

Number 2:

Look at the total cost of the package over the tie in period of the mortgage deal.

This means looking at the interest rate during the tie in period, and including the cost of any product fees, arrangement fees, valuation fees, chaps fees or telegraphic transfer sees and also any final repayment fees or closure fees.

A mortgage broker will compare thousands of mortgage deals once they have held an initial chat with you to understand your circumstances and needs. This conversation helps them to understand what motivates you as a mortgage borrower.

Now, let me go back a step because it’s not that easy…..if it was then you’d all be arranging your own mortgages and mortgage brokers wouldn’t exist!

Mortgage lenders will generally offer a mix of mortgage deals for the same situation. For example they may offer a really attractive low interest rate, but may charge an arrangement fee for let’s say £999. They may also offer a higher interest rate with little or no arrangement fee. Why do lenders do that? Well, they offer a range of deals to attract different client types. Someone seeking a mortgage may despise paying a lender fee, or they may have such a small mortgage that the interest rate has very little impact on their monthly repayments and paying a fee to get a lower rate is more expensive. These are all factors the mortgage advisor will take into account when assessing your needs.

Let me just add another point on fees because lenders will often allow you to pay the fee upfront or add them to the loan amount, but what is the right thing to do? Should I add my mortgage fees to the mortgage? Well, there is no right or wrong solution. The one thing that is certain is that when you add fees to the mortgage you will erode the equity in your home and also be charged mortgage interest on that fee. Some people prefer to add the fee to save them on upfront costs because they have so many other fees to think about and don’t want to run the risk of paying more fees to subsequently experience the chain falling through and they have to pull out of the purchase or a better deal becomes available so they have to change mortgage lender and then lose the fee.

An experienced mortgage adviser will be able to provide advice to the most suitable set up for your needs. This is something you will not get from comparison websites. They are informative with providing product details but they a). Don’t tell you if you are eligible for that mortgage, b). Don’t provide advice to the level of understanding all the granular details about overpayments, porting, early repayment penalty charges etc. c). They often only work on an ‘execution only’ basis whereby once you’ve found a product, you don’t receive advice to whether or not it’s suitable for your needs.

My penultimate point, the better mortgage brokers will also add another research tool to their toolkit when reviewing the best deals for their clients…….it’s known as a capital erosion calculator or if you’d prefer a more American term used in UK accounting, amortisation. This calculator assessing comparable mortgage rates to understand how it may impact on your capital balance over the chosen mortgage tie in period. It’s a fantastic tool that helps show you potential savings. One thing to point out here is that it is absolutely useless for interest only mortgages because with that style of mortgage you are purely paying interest back and the capital balance remains unchanged.

Other factors effecting how you compare mortgages are based on:

- The repayment method

- The repayment term

- Your plans with reducing the capital balance during the tie in period.

If you are considering taking out a mortgage

If you are considering taking out a mortgage, we always recommend that you speak to a qualified mortgage advisor before making any decisions. A Broker or Adviser can explore your options as widely as possible and find a loan best suited to you.

If you have any more questions about mortgages, feel free to contact us via our:

Telephone: 0117 251 0083

Or our email: enquiries@integraf.co.uk

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Thank you for reading, and we hope to hear from you soon.

PLEASE NOTE: A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. We offer a comprehensive range of mortgage products from across the market. We offer both first and second charge mortgages, but not deals that you can only obtain by going direct to a lender. For those seeking to increase their existing borrowing, alternative finance options may be available and more appropriate for your needs. For example, a further advance from your existing lender or an unsecured loan (e.g., a personal loan).