If you’re searching for a new mortgage, you could have more options than you expect. While it may present an opportunity to secure a competitive deal, it might also be overwhelming. Read on to find out how you could effectively narrow down your choices.

According to Moneyfacts, the number of mortgage deals on offer increased for the sixth consecutive month in January 2024. In fact, there were almost 5,900 options – the last time there were more deals available was in 2008. 

So, how do you figure out which mortgage deal is right for you? Here are five steps that could help.

1. Decide if you’d prefer a fixed- or variable-rate mortgage

Understanding what type of mortgage you want could help you remove the options that don’t suit your needs. One of the key factors to consider is whether a fixed- or variable-rate mortgage would be right for you. 

The interest rate on a fixed-rate option will remain the same throughout the deal. This may be a good option if you’re worried about interest rates rising or would like peace of mind knowing how much your repayments would be each month. However, if interest rates fell, you could end up paying more interest overall when compared to a variable-rate option.

In contrast, the interest rate on a variable-rate mortgage deal can rise or fall depending on interest rates at the time. So, if interest rates fell, you could benefit financially. However, if rates increased, your repayments would also rise. 

The good news is that after two years of interest rates climbing, the figures from Moneyfacts suggest they are starting to fall. In January, the interest rate for both average fixed- and variable-rate mortgage deals fell when compared to just a month earlier. 

2. Set out how long you want your mortgage deal to last for

A mortgage deal will last for a defined period, often two, three, five, or 10 years.

When choosing which length suits you, considering your long-term plans might be useful. For example, if you plan to move within the next few years, a shorter deal could make more sense and allow you to avoid an early repayment fee. 

Remember, when your existing mortgage deal ends, you’ll usually be moved on to your lender’s standard variable rate (SVR), which often isn’t competitive. 

Making a note of when your deal will run out could help you avoid paying a higher interest rate than you need to. You can usually lock in a new mortgage deal six months before your current one expires. 

3. Calculate how much you want to borrow

Setting out how much you want to borrow could be essential when comparing different lenders. 

If you’re a first-time buyer, you’ll usually take out a 90% mortgage, but some options could allow you to get on the property ladder with a smaller deposit. Understanding how much you’re likely to be able to borrow is useful before you apply for a mortgage. We could offer support here and help you apply for an agreement in principle. 

For existing homeowners, you might want to increase how much you borrow through your mortgage to fund a home renovation project or other plans. Alternatively, you might have a lump sum that you want to use to pay down your mortgage debt, which could help you secure a more competitive deal and reduce the amount of interest you pay. 

4. List any features you want your mortgage to have

The interest rate you pay is undoubtedly an important part of choosing a mortgage, but it might not be the only feature you want to consider.

For instance, if you hope to repay your mortgage sooner by overpaying, choosing a mortgage that allows this without a fee could be valuable. Or being able to port your mortgage may be useful if you’re thinking about moving in the short term.

5. Contact a mortgage adviser

There are a lot of mortgage lenders to choose from, including some that don’t have a high street presence so you may not have heard of them. As a result, it can be difficult to navigate the mortgage market on your own, even after you’ve narrowed down what you’re looking for. 

It can be especially challenging when you consider that the average shelf-life of a mortgage product was just three weeks in January 2024. So, the deals on offer are frequently changing. 

A mortgage adviser could offer invaluable expertise when you’re searching for a new deal, whether you’re a first-time buyer or would like to remortgage.

We can help you understand which mortgage options suit your needs, as well as which lenders are more likely to accept your application. We can also offer guidance throughout the process, such as support when you’re filling in paperwork, which could help you minimise delays.

Please contact us to talk about how we could help you find a mortgage.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 08/02/2024