Cheap mortgage finding
How to find the best deal for you
Getting the right mortgage or remortgage deal can save you £100s each month. With interest rates at the highest they've been for many years, it's possible to get it wrong and end up paying massively over the odds. In this step-by-step guide, we aim to show how to find the best mortgage deal for you, where to look for a good mortgage broker and other key information.
Step 1: Do a 10-min search for mortgage deals online
Before we begin searching for mortgage deals, we're assuming here that you've a basic understanding of mortgages and what kind of deal you're looking for. If this isn't the case, then why not check out our What type of mortgage to choose guide first?
Once you know what mortgage you want, whether you're going for a fixed, variable, discount or specialist mortgage, you need to start looking at what rates you can get. This will depend on the size of your deposit and the value of the property – the bigger your deposit compared to the value of the property (known as 'loan to value'), the better rates you'll be able to get.
But in starting your search for the best deal, the first thing you need to know is:
'NEVER just go to your bank for a cheap deal.'
Your existing bank will only give you its range of deals, not the array of alternatives, meaning it's unlikely you'll stumble across the best one for you. But do check what it's offering as a starting point.
Benchmark a good mortgage rate using MSE's Best Buys tool
There are lots of mortgage comparison sites out there, but none guarantees to show you all the deals available. This is because the mortgage market is complicated and some deals are only available through certain brokers, making it very difficult for a comparison site to know about every single deal at all times. But our Mortgage Best Buys tool has all deals available direct, and most available to brokers, so it's a great place to start.
Don't use the APRC to compare – it's mostly meaningless
All lenders have to tell you their APRC – the effective averaged annual interest rate if you held your mortgage for the entire term (normally 25 years). This is rather annoying, as it's a rate that in most cases you'll never have to pay, so it's meaningless.
If you had a fixed rate at 3.49% for two years, and then the rate it reverted to afterwards was 4.74%, the APRC would be around 4.3%.
So why do we say it's mostly meaningless?
- You never pay 4.3%. It's an averaged rate over the entire term
- You're likely to remortgage long before the term ends
- The rate it reverts to (the standard variable rate) is likely to move anyway
What you really need to focus on is the initial rate, the fees and the rate it goes to once your deal has ended. For further reading, see Martin's Why mortgage APRCs are meaningless blog.
Step 2: Now talk to a mortgage broker
Once you've benchmarked a good rate from our Mortgage Best Buys tool, it's time to see if a qualified mortgage broker can beat it.
Mortgage brokers scour the market to find you a good mortgage deal. By using one, you swiftly cover a huge slew of lenders, and get added clout with them to ease your acceptance as well as an extra layer of protection if things go wrong.
Qualified mortgage brokers are also worth their weight in gold, because they know key details about lenders' criteria. So they would know if the lender you're thinking of doesn't lend on properties above shops, or in council blocks – so they'd be able to recommend a different lender that does.
But, the key is to find a broker you're comfortable with. The estate agents you meet when house hunting will often recommend brokers. They may even work from the same office. But you are NOT tied to using these, even if you buy via that estate agent.
Ask friends who've moved for recommendations – many local brokers are fantastic. The aim's to find you the best broker for the lowest possible price. Not all brokers are the same. Some are limited in what they can offer you.
Here are the three crucial questions to ask brokers...
1. Can you get me a mortgage from any UK lender, right now?
This finds out if your broker can source you ANY UK mortgage. Not all can so it's important to know which you're dealing with. Here are some of the possible answers:
- 'No.' Some brokers are tied to one lender or operate off a small panel of lenders, so they search fewer deals. This makes it simpler and cheaper for them to operate.
- 'We check all products available to brokers.' The key point to note here is the last phrase – available to brokers. This used to be called 'whole of market'. Many of these brokers will exclude lenders and products which are only offered directly to the public, mainly as they won't receive a commission. On top, they may not be able to submit an application on your behalf.
- 'We check all lenders.' Some brokers do check lenders' direct-only deals too. However, they are more likely to charge a fee. In reality, it's unlikely a broker could guarantee you access to EVERY mortgage, as exclusive deals can be arranged between lenders and brokers (and clubs that brokers can join).
Just be clear on what your broker is offering. Weigh up the need to check every deal, your willingness to do some legwork yourself, and if you're happy paying a broker fee. Once you've found a broker you're happy with, you need to ask them the next questions to find out if they're the best broker for you.
2. Do you charge a fee?
This tells you how the broker makes their money from your mortgage deal. Brokers have two possible sources of income, which are:
- Commission. Almost all lenders pay brokers what's called a 'procuration fee' of roughly 0.35% of the transaction (£350 per £100,000). This is a commission based on your loan size – and doesn't affect the cost of your mortgage. They are obliged to tell you the exact amount they'll be paid before you apply. You can find this info alongside the 'Key Facts Illustration', which they must provide before you apply.
- Fees. Brokers may also charge you a fee directly. This might be on top of the commission, or instead of it (in other words, they charge a fee and refund you the commission). If they offer you the choice between fee or commission, then they can call themselves 'independent'. If they don't, they can't – which is a bit confusing.
No reputable broker should charge more than around 1% of the mortgage value, even for customers with a poor credit rating. If yours charges more, walk away. Fees can be charged at any point in the process, providing you're told about them at the outset. Yet avoid using any broker who charges you big fees before completion. If the purchase falls through, you'll probably still have to pay.
As this is a MoneySaving site, we've always said our preference is not to pay a fee if you don't have to. For this, you're looking for a fee-free broker (in other words, one that makes their money through commission) who can advise on the widest range of mortgages possible.
3. Are you qualified?
You need to find out whether a broker is qualified to advise you. Make sure you're getting advice from a qualified mortgage adviser (the most recognised qualification is called CeMAP). Your broker should assess your needs and eligibility before recommending the most suitable product for you. This route also offers the most protection for you as a consumer.
If the advice turns out to be wrong, the Financial Ombudsman will be able to investigate any wrongdoing. If you chose a product from an information-only service, you'd have no comeback if you made the wrong choice.
Now you know what you're looking for, as we can't review every mortgage broker in the UK, we've concentrated on some of the big ones that have nationwide scope, plus ways to find local face-to-face brokers. If you have any doubts about a broker, find a different one – there's nothing wrong with talking to several before you settle on one.
|L&C Mortgages*||90+ lenders. Broker-only deals||
- Phone: 0800 073 1957
|Habito*||90+ lenders. Broker & direct deals||- Habito website*||More info|
|Trinity Financial*||90+ lenders. Broker-only deals||
- Phone: 0808 164 2174
||90+ lenders. Broker-only deals||
- Phone: 0203 3884 1660
|Moneybox Mortgages*||90+ lenders. Broker-only||
- App (after initial contact made via website)
|John Charcol*||120+ lenders. Broker-only deals||- John Charcol website*
- Phone: 0333 230 4467
(specialist broker for self-employed / contractors)
|90+ lenders. Broker-only deals||- CMME website*
- Phone: 01489 555080
If you've had credit problems, whether mild or severe (see our Credit scores guide), and are trying to sort a mortgage, be very wary of going to the 'specialist poor credit' brokers who advertise everywhere.
These often charge very high fees as customers tend to think that's all they can get. There's absolutely no need to go to a specialist though; most normal brokers (including the ones listed above) also deal with what's called the 'sub-prime' market too, and at the same fee rates that they normally charge.
Most brokers only charge upon completion of the mortgage so there's nothing to stop you getting a second, or even a third, opinion. Two heads are often better than one, so why not try a few brokers and see if any beat the others?
Do check that the brokers don't submit an Agreement in Principle without your permission as this can involve a hard credit search on your file. Too many of these may actually hurt your credit score, meaning you get a worse deal (see our Credit scores guide).
The other benefit of this is that different brokers often have exclusive deals from lenders (though there may be a small fee for 'booking' these). The big national brokers have their own deals and local brokers may offer exclusives via 'broker networks' which negotiate deals for them. Always weigh up the benefit of the exclusive deal against any fees.
It's worth asking what commission your broker's getting for arranging the mortgage. This should be stated on the last page of the mortgage illustration too – it's likely to be between 0.35% and 0.5% of the mortgage value. So on a £100,000 mortgage, the commission or 'proc' fee they get will be between £350 and £500.
It's worth asking if they're prepared to rebate any of their commission as cashback to you when the mortgage completes, especially if you're paying a fee for their services as well.
You're more likely to be able to strike a deal on larger mortgages (where your fee plus their commission is more than £1,000), but the broker's well within their rights to say no, whatever the final income they get from arranging your mortgage.
Step 3: Then check deals that most brokers miss
If you used our Mortgage Best Buys tool to benchmark a rate before you went to a broker, and it couldn't beat your rate, then you've probably already done this.
And if your broker says it tells you about all deals on the market (not just the ones they can transact for you), this part should already have been done. It may be worth double-checking, but it's likely you've already found the best deal for you.
If you used a standard broker, it may still miss some deals as sadly, some lenders have retreated from the broker market to cut costs. Some simply don't allow brokers to access any of their deals; others reserve some deals for direct sales only.
For belt 'n' braces, compare a broker's best result to the three types of mortgage it may not have included:
- Lenders that don't operate through brokers
Yorkshire Bank and First Direct are two examples of lenders that don't offer their deals through brokers, you'd have to apply direct.
Yorkshire Building Society also doesn't work with brokers, though it does deal with them through its own broker brand, Accord. Brokers who say they search the whole market should include direct-only deals in a comparison, but they don't have to offer to help you purchase these.
- Lenders that don't offer all their deals through brokers
You'll really need to do some legwork for these. A few lenders put some deals through brokers and offer some only direct. Just to show there's nothing like keeping things simple!
In some cases direct deals can be much more competitive (but not always). Usefully, MSE's Mortgage Best Buys tool finds the best deals for you, and tells you if they're available through brokers or only direct.
- Exclusive deals from other brokers
In the final category are the deals which are available exclusively through certain broker networks, as they sometimes negotiate their own deals with lenders. Unfortunately, we can't cover all of these in our best buys tool, but they're not a significant proportion of the market. For full belt 'n' braces, you could try a few different brokers.
To properly compare deals, find the best deal that a broker can offer you, and the best deal you can find using our Mortgage Best Buys, then use our Compare two mortgages or Compare fixed-rate mortgages calculators to see what each will cost you.
Step 4: Check mortgage paperwork
You could start a library out of the amount of paperwork you get sent when you take out a mortgage or remortgage. The main documents you need to be aware of are:
Key Facts Illustration
The Key Facts Illustration does what it says on the tin. It gives you the 'key facts' about the mortgage product, not all of them, but all the main ones. You should be given one of these before you make an application and you should check through carefully. Here's what to look out for:
- Does it have the Key Facts logo on it? (Shown above)
- Does it have the correct date on it?
- Does it have your name on it?
- Does it state who has created it? This will be your broker's details, or the lender if you've gone direct.
- Does it say if you've been recommended the product?
If all of the information's in there, file the illustration and keep it. If some of this information's missing, ask the lender or broker for a new one. In the event you ever have a disagreement with your lender, this document is a crucial piece of evidence that proves what you were recommended, by who and when. Your lender won't keep a copy forever, so keep it somewhere safe as it could be years before you need it again.
Once you've successfully applied for a mortgage, you'll be sent a mortgage offer by the lender. This gives ALL the facts about the mortgage and the conditions on the loan that you are agreeing to.
It's a bit more reading, but it's massively important you read through it and check every detail is 100% accurate. Be sure to look for:
- Mis-spelled names or incorrect loan figures. This could stop the mortgage at the very last minute, resulting in delays, additional expense, jeopardising the purchase and even more scarily, losing the mortgage offer completely.
- Anything unexpected, particularly info that contradicts your Key Facts Illustration. Pay particular close attention to fees, early repayment charges and the conditions you need to meet to complete (as it's your solicitor's job to check you've met these before the money can be drawn down).
Your broker should also check the mortgage offer, but don't rely on that. If you were to disagree on a point later down the line, it could be very difficult to win the argument if you've signed the document accepting the conditions.
Step 5: Watch out for the hard sell
Some lenders and brokers try to make more money elsewhere in the mortgage process. So be prepared for the hard sell on these products.
Mortgage payment protection insurance (MPPI)
Sometimes called accident, sickness and unemployment insurance (ASU), MPPI is supposed to cover your payments if you have an accident, become ill, or you're made redundant.
You can get limited help from the Government in these circumstances but, at best, it will only cover your interest. So it's sensible to consider, before you take out a mortgage, how you would manage to meet your repayments if these events happened.
MPPI isn't a bad policy but it can be quite pricey and has been mis-sold in the past to people who couldn't actually claim on it. This can happen because the insurer doesn't carry out any checks when you first apply, only when you go to make a claim.
What to ask before taking out MPPI
If you do decide to take out an MPPI policy, check carefully:
- That it will pay out if you claim
- When it will pay (you may have to wait several weeks before the policy kicks in)
- How much it'll pay and for how long (it usually only covers your repayments for 12 months)
Ensure you understand all the terms and conditions before signing on the dotted line.
Buying MPPI from your mortgage broker. Be careful when buying from your mortgage broker here. It may not be able to get you the best-priced policy. It's common for a broker to offer whole of market mortgage advice, but then be tied to a single, or small, panel of insurers.
There's no harm in getting a quote from your broker for MPPI, but make sure that you compare with other policies to see if it's a good deal.
Bundled buildings / contents insurance
All lenders will insist you take out buildings insurance, and normally it's a condition of them giving you the mortgage in the first place. But be very suspicious of deals which insist you buy your buildings insurance through your lender. While the amount quoted may seem reasonable in the first year, you'll then be trapped into accepting whatever premium increases they foist on you in subsequent years, for as long as the mortgage lasts.
Some lenders might add on an admin fee of around £25 if you decline to take their insurance, but this can normally be recouped from the insurance provider you end up going with. If you go elsewhere for your home cover, some seriously cheap deals are possible. By using cashback sites, some people have even been PAID to take out insurance. See our Home insurance guide.
Life cover from your mortgage seller
Don't assume just because someone sold you one financial product, they'll automatically get you a good deal on extra bits such as life cover or other insurance.
Buying your first home is probably the first time you've thought about life insurance, but don't rush in and grab the first one offered to you. In some cases you can save 50% on the life cover sold by your lender or broker.
As Ken told us: "Friends of mine were paying £42 and £51/month for mortgage life insurance through their broker. After researching your site, they obtained quotes elsewhere for £9 and £11/month – a colossal saving as the term is 25 years."
Ready to get a mortgage? We've lots more guides, tools & tips to help...
- Mortgage Best Buys. Find top mortgage deals.
- First-time buyers' guide. Free PDF guide.
- Remortgage guide. Free PDF guide.
- Green mortgages. Could they save you cash?
- Buying a new-build home. Top tips and what to look out for.
- Self-employed mortgages. How they work.
We've handy mortgage calculators too, including...
Clever ways to calculate your finances