Archive: MoneySavingExpert's Money Tips Email

UK base rate expected to be cut on Thu!
Sub-4% mortgage rates are back, there's a record number of low deposit mortgage deals, & for some buying undercuts renting
Step-by-step cheap mortgage help

Martin: In two days' time, it's widely expected the Bank of England will cut the UK base rate from 4.5% down to a likely 4.25%. And even if not, markets are already pricing in several UK base rate cuts this year - leaving some economists predicting the base rate at the start of 2026 will be around 3.5% (one even says below 3%).

It's therefore arguable that the silver lining of the world's economic clouds, which is driving these cuts, is the benefit for those looking to buy a new or bigger property, or remortgage (get a new mortgage for the same property), as lower interest rates are predicted.

And market sentiment has a material impact on today's mortgage rates. That's because, in simple terms, while variable rates tend to move with UK base rates... with fixes, lenders instead set intro rates based roughly on what the market expects the borrowing cost to be over the period fixed.

So an expectation of lower rates cuts the rate fixes are offered at today. The cheapest fixes are already well below the current base rate, with one 2yr fix at 3.79%, and a 5yr fix at 3.83% (both need under 60% loan-to-value). Cheap rates have dropped so much it's questionable, should a base rate cut be announced on Thu, whether they'll move much as it's already factored in.

While fixed mortgages have got cheaper, should you wait to see if they'll drop further?

It is absolutely possible fixed mortgage rates will fall further, and certainly tracker and variable rates will fall if the base rate drops. Yet we've spoken to brokers and they say further substantial fixed cuts are not guaranteed (see what 4 brokers say in full), and it is always possible sentiment could move the other way.

They all pointed out that this is a decent time to get a mortgage, as approvals are down and there's a negative economic outlook, so lenders are trying to offer better deals and generous loan sizes. With an uncertain future, rather than trying to perfectly time the markets, I'd agree with them that it's more important to look at your own circumstances...

- Nearing your fix's end? Try to secure a cheap rate, then keep it under review till it's active, it may be ditch-able if a cheaper deal comes along (more below).
- Paying a high rate right now? Like any firm's Standard Variable Rate (SVR), typically 7.5%. Sorting a new deal now saves you money straightaway.
- Found an affordable house you want? Buying now locks it in.
- Circumstances less clear-cut? There's a chance waiting may help.

So that's the big picture, below the team and I have worked on step-by-step cheap mortgage help... including for 1st-time buyers who are struggling. Martin.

These are quick notes. For full help, download our FREE...

- 1st-time buyers' 53-page PDF booklet
- Remortgage 58-page PDF booklet

PS: First-time buyer saving for a deposit? Check out Top LISAs, where you can get a 25% boost of up to £1,000/yr on what's saved.

1) FTB REMO The quick financial checks to boost mortgage acceptance chances. Ideally, several months before getting a mortgage, start making yourself as financially fanciable to lenders as possible (if you're past that, do what you can). We've 18 tips in our Boost your mortgage chances guide, but here's a taster:

- Ensure you're on the electoral roll (registered to vote). Lenders use this as an ID check, without which it can make things tougher. You can opt out of the open register to stop marketing - see electoral roll help (also includes what to do if you're a foreign national).
- Limit credit applications. In the run-up to getting a mortgage, don't switch bank, and minimise applications (including consistent new use of buy now, pay later).
- Stay out of your overdraft. Some lenders may not tolerate you being in your overdraft at all in the last three months. See avoid overdraft.
- Always pay your bills on time. It's obvious, so do it.
- If remortgaging, be mindful when your deal ends. You don't want to go on your lender's Standard Variable Rate, it's usually a hideous c. 7.5%.

2) REMO Check what 'product transfer' your current lender will offer you three to six months before your deal ends. A product transfer is when you switch deal with the same lender. Until fairly recently, many let you do this six months in advance, and while a few still do, most have reduced it to three or four months. This... 

1. Sets a good benchmark, so you know what others need to beat.
2. May let you lock a deal in as an insurance policy against rates moving the wrong way, especially if, as some allow, you can ditch it penalty-free later if cheaper deals emerge that are better for you. Full info and pros and cons in lock in early help.

You can normally sort a product transfer directly with your lender. Or, if you'd prefer, use a mortgage broker to arrange it.

3) REMO Ensure you know your CURRENT mortgage's info. If you're switching deal, knowing the following information about your current deal will help when searching for a new one:

- What's the rate? Plus monthly repayments.
- How much do you still owe? What's your outstanding mortgage balance?
- What type is it? Fix, tracker or Standard Variable Rate?
- When's the intro deal over? Eg, when does your fix end?
- What's the term (when must it all be repaid)? In 10, 20 or 25 years?
- Will you be penalised to switch deals? Does your fix or tracker have an early repayment charge? If it does, it'll likely be tough to find a rate right now that makes it worth paying the charge.
- What's the loan-to-value (LTV)? This is the proportion of the home's current value that you borrow (more on that in point 5...)

4) FTB REMO Do a comparison to find out what's available. Some sample rates are below, but for a proper view of what's on offer, see our mortgage best-buy comparison tool:

5) FTB REMO Your loan-to-value (LTV) is often the single biggest factor impacting your mortgage rate. Lenders offer a rate based on how much you borrow as a proportion of the home's current value (known as loan-to-value - LTV for short). Put simply, a lower LTV is a better LTV. See Martin's single biggest mortgage factor video briefing.

For 1st-time buyers, your LTV is dictated by your deposit, eg, a 10% deposit is a 90% LTV, as that's the amount you'll borrow.

For those remortgaging, it's about your mortgage-to-house value, eg, a £200,000 mortgage on a house now worth £300,000 is a 67% LTV (so if your house's value's risen, your LTV's likely lower). Though if you've any savings, you could use them to reduce the LTV when remortgaging too.

Mortgages get cheaper as you drop down LTV thresholds. These can be every 5%, but there is often a bigger impact at 90%, 85%, 80%, 75% and 60% - after that, it tends not to change. Use our mortgage comparison to see the impact for yourself, but as an example...

Crucially though, remember a 9% deposit, while equivalent to 91% LTV, only gets you a 95% LTV mortgage. In which case, if you could possibly push to get a little more deposit, it can make a big difference on the mortgage. See LTV help for more and our Compare Two Mortgages calculator to work out the exact differences for you.

6) FTB REMO Try to go £100 beyond any LTV threshold. If you've worked hard to get enough together to reach the next LTV band, for instance, 90% or 75%, try to push to £100 beyond that. This isn't to reduce the cost, but anecdotally it can ease acceptance, as to mortgage underwriters it might no longer look as if you're scraping to get to the limit (and lenders might not require quite as high a credit score).

7) FTB REMO How much can you borrow? Both income and the size of your deposit (or equity) impact how much money a mortgage lender might let you borrow. Lenders will also 'stress test' to see if you'd be able to keep up with repayments if interest rates went up. Our How much can I borrow? calculator gives a decent idea of how much a lender might let you borrow.

8) FTB REMO Use the Ultimate Mortgage Calculator to ensure you know exactly what you'll pay. We've got a suite of powerful tools as part of our Ultimate Mortgage Calculator, including...

- Basic mortgage calculator
- Compare two mortgages
- Compare fixed-rate mortgages
- How much can I borrow?
- Saving for a deposit
- Overpayment calculator

9) FTB REMO Two KEY factors determine whether a lender will accept you. Finding the cheapest mortgage deal on a comparison is one thing, a far more difficult consideration is whether you will be accepted for it. This is especially important if you're a first-time buyer or remortgaging to a new lender (rather than a product transfer with your existing lender).

• Affordability score. Lenders carry out strict checks to see if you can afford mortgage repayments on top of your other expenses.
  
  Lenders also 'stress test' how you'd cope if interest rates went up (there's no firm rule about how high lenders must stress test by, but typically lenders stress test something above their current Standard Variable Rate, typically 7.5%), meaning you'll need extra leeway in your finances.
  
  If you join, or are already a member, use the free MSE Credit Club Mortgage Affordability Score to get an assessment of it. If you're struggling with the affordability score, as many lenders' checks involve going through your bank statements in the run-up to your mortgage application, you can help by going frugal and reducing your outgoings in the 3 to 6 months before your mortgage application.
  
  Though things are easier than they were, as the financial regulator, the Financial Conduct Authority, has reminded lenders they have some flexibility. Santander, Halifax, HSBC and NatWest have loosened their affordability testing since March, eg, reducing stress testing, meaning you may be able to borrow £10,000 to £40,000 more than before.
  
  
• Credit score. A poor credit history can torpedo a mortgage or remortgage application. So check your credit file (for free) to ensure there are no errors, then minimise other credit applications, and pay down debts if you can. The MSE Credit Club will help you through this, including your credit file, a credit score assessment and bespoke tips on what you can do to improve the situation. Also see our 29 tips to boost your credit score guide.

Yet even if you've done everything right with your credit report and minimised outgoings, know that lenders' acceptance criteria differ from one to the next, meaning not everywhere will accept you. So...

10) FTB REMO Use a mortgage broker to help you through, and to ease acceptance. See our full find a good broker help. A mortgage broker is a regulated adviser who is able to guide and recommend individual mortgage products to you.

Plus, crucially, brokers have details of most lenders' acceptance criteria, which are not usually available to the public, so they can help match you to the best deal that will accept you (and can discuss your circumstances with the lender, if necessary).

Additionally, there are sometimes top deals, and even some product transfers, which are ONLY accessible through brokers.

Brokers will often also monitor interest rates even after you've applied for your mortgage deal in case better rates come along before the mortgage deal commences (apply directly and lenders may not do the same).

PS: Thanks to brokers David Hollingworth of L&C*, Nick Mendes of John Charcol*, Will Rhind of Habito* and Aaron Strutt of Trinity Financial* for doing a fact-check read of this for us.