Best mortgage rates and how to find them

How to secure the best deal on one of life's biggest financial investments
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  • For most of us, mortgage or rent payments are our biggest regular expense. So, getting the best mortgage rate can mean you save hundreds, or even thousands of pounds a year in payments. The mortgage market is competitive at the moment, but that doesn’t mean it’s easy for everyone to get a great mortgage.

    Get to grips with your home finances, courtesy of our property advice

    Mortgage lenders are using interest rates to manage their demand. What that means is that if they come out with a deal with great mortgage rate, it probably won’t hang around for long. And some banks and building societies are quite picky about who gets their best rates. But, whatever your situation, there are steps you can take to improve your chances of getting a great deal.


    The best mortgage rates in May 2019

    Best two-year fixed rate mortgages

    Lender Deal rate Deal Fee Max LTV ERC Notes
    Barclays 1.44% 2yr fix £999 60% Yes Free valuation. Free legal work for remortgage
    Leek United 2.95% 2yr fix £0 95% Yes Free valuation & £250 cashback

    Best five-year fixed rate mortgages

    Lender Deal rate Deal Fee Max LTV ERC Notes
    Barclays 1.83% 5yr fix £999 60% Yes Free valuation. Free legal work for remortgage
    Hanley Economic 2.99% 5yr fix £999 95% Yes Free valuation

    Best 10-year fixed rate mortgages

    Lender Deal rate Deal Fee Max LTV ERC Notes
    TSB 2.29% 10yr fix £995 60% Yes Free valuation. Free legal work for remortgage
    Virgin Money 4.98% 10yr fix £0 95% Yes £300 cashback

    Best two-year tracker rate mortgages

    Lender Deal rate Deal Fee Max L


    ERC Notes
    Leeds 1.38% 2yr tracker £999 75% Yes Free valuation. Free legal work for remortgage
    Monmouthshire 2.55% 2yr discount £0 95% No Free valuation

    Best interest-only mortgages

    Lender Deal rate Deal Fee Max LTV ERC Notes
    HSBC 1.54% 2yr fix £999 75% Yes Free valuation. Free legal work for remortgage
    Barclays 1.90% 5yr fix £999 75% Yes Free valuation. Free legal work for remortgage

    Best first-time-buyer mortgages

    Lender Deal rate Deal Fee Max LTV ERC Notes
    Tesco 2.82% 2yr fix £995 95% Yes Free valuation & £500 cashback
    TSB 3.29% 5yr fix £995 95% Yes Free valuation & £500 cashback

    Best retirement interest-only mortgages

    Lender Deal rate Deal Fee Max LTV ERC Notes
    Penrith 2.59% 2yr discount £699 50% Yes Free valuation & legal work
    Leeds 3.99% 10yr fix £999 55% Yes Free valuation

    Best buy-to-let mortgage

    Lender Deal rate Deal Fee Max LTV ERC Notes
    Leeds 1.46% 2yr tracker £999 60% Yes Free valuation. Free legal work for remortgage

    Source: London & Country mortgage brokers

    How do I find the best mortgage rate?

    best mortgage rates

    Image credit: Katie Lee

    If you’re thinking of buying a property or remortgaging, a good starting point is to get a feel for the mortgage rates on offer. That means looking at some mortgage brokers’ websites and at price comparison sites. Check out what your own mortgage lender or bank is offering as well, as some have better deals for existing borrowers or customers who bank with them.

    High-street lenders can be competitive, but they’re not the only option if you’re looking for a mortgage. Small building societies can sometimes be more understanding and flexible if your situation isn’t straightforward, such as if you’ve recently swapped jobs or are self-employed. And there are some digital and mobile-only banks that also offer mortgages.

    Mortgage brokers that have good ‘best buy’ tables include London and Country and John Charcol. Martin Lewis’s MoneySavingExpert also has a user-friendly best buy mortgage table.

    Mortgage rates move quickly so you may be able to get a better rate when you actually come to apply.

    Preparing your finances

    Once you’ve got an idea of what’s on offer, start your preparation so your finances are in the best shape when you actually apply for your mortgage. Don’t leave this until the last minute. Check your credit rating a few months before by applying for a copy of your credit report.

    You should do this at the three main credit reference agencies; Equifax, Experian and TransUnion (its consumer brand, Noddle, provides credit reports for free). You can apply for a copy of your report online. It will cost £2 with the other two agencies every time you apply, but you may be able to get your report for free through the regular promotions they run.

    The reason why it makes sense to apply for your credit report in advance is that if there’s a mistake, you have time to get it corrected. And if your credit report shows late or missed payments, you can add what’s called a ‘notice of correction’. This a short explanation of why you missed the payment. A mortgage lender would have to look at this explanation before it makes a decision about whether or not to lend to you.

    If you’re not on the electoral register, sign up for it. Mortgage lenders use it to verify that you are who you say you are, and it will affect your credit rating if you’re not registered. You can do this at Register to Vote.

    If you’re normally overdrawn, reduce or pay off your overdraft. Mortgage lenders will be nervous if your overdraft is increasing month by month or is sizeable. You don’t have to be debt free, but banks will take any debt you already have (such as loans and credit cards) into account when working out how much to lend.

    Working out how much to borrow

    best mortgage rates

    Image credit: TI-Media

    Although mortgage rates for particular deals vary from lender to lender, they all tend to charge a higher rate the more you want to borrow in relation to the value of the property (called the Loan To Value, or LTV).

    Mortgage lenders tend to work to similar thresholds, with mortgage rates typically rising for every extra five per cent you want to borrow. So, if you can keep your borrowing at, say, 80 per cent rather than 82 per cent, your mortgage rate should be a bit cheaper.

    Which type of rate to go for?

    There are lots of different types of mortgage rates, and it’s not always clear exactly how they work.

    • Fixed rates are the most straightforward – they do what they say on the tin. The mortgage rate can’t go up or down during the term of the fix, which is typically between two and ten years. They’re great if you need certainty but they normally come with an early repayment charge if you need to pay the mortgage off before the term ends. It’s not a problem if you’re moving home and you can take your mortgage with you.
    • Tracker rates track the Bank of England base interest rate. When the Bank of England rate goes down, the tracker rate immediately falls by the same amount and vice versa when the rate rises. Different mortgage lenders will charge a different premium on their tracker rate. This is the difference between the Bank of England base rate and the rate you’re charged. At time of writing, some best buy tracker rates charge between 0.65 and 0.75 per cent above the base rate.
    • Discount mortgages are a different type of variable rate. Here, instead of paying a premium above the Bank of England Rate, you get a discount off the lender’s standard variable rate (SVR). Unlike tracker rates, mortgage lenders don’t have to increase or reduce the discount rate when the Bank of England changes its interest rate. If they do, they don’t have to change the discount rate by the same amount.

    When your mortgage rate runs out, you’ll go onto your lender’s standard variable rate unless you switch to another deal. Always check what the Standard Variable Rate is before you choose a mortgage deal. They vary by over two per cent between lenders and, if your circumstances were to change and you couldn’t qualify for a great rate, you want to know you’re not being hammered by the SVR.

    If you’re confident in finding the best deal, you can sort it out yourself. Bear in mind that finding the cheapest rate is easy, but finding the best mortgage is less straightforward.

    Comparing mortgage lenders

    Mortgage lenders charge an array of fees and some are much better and speedier at turning around offers – crucial if you need to move fast to secure the property. While others are a better option if you’re self employed or your employment isn’t straightforward – for example, you’re on a fixed-term contract or your work is seasonal.

    That’s where a mortgage broker can be worth their weight in gold. You can see one face-to-face, over the phone or use a digital broker. Whatever you choose, make sure you know exactly what you’ll be paying for their advice and check what people say about them on review websites like Trustpilot and Feefo.

    What effect is Brexit having on mortgage rates?

    best mortgage rates

    Image credit: Lizzie Orme

    Brexit may have created the political show of the decade, but working out its effects on mortgage rates is hard to unpick, according to Peter Gettins of mortgage brokers London and Country: ‘I’m no economist and it’s hard to see a direct impact on mortgage rates that can be clearly attributed to Brexit’. What Brexit has resulted in is fewer buyers, and that, in turn, has meant that some mortgage lenders have reduced their interest rates in an attempt to attract customers.

    Peter says this is particularly noticeable on high loan-to-value mortgages, such as 95 per cent. ‘Today you can get a 95 per cent five-year fixed rate as low as 2.99 per cent. Six months ago you would have done well to find a similar product at 3.5 per cent.’

    Will mortgage rates go up or down?

    It’s always hard to predict whether mortgage rates will rise or fall and with the current political situation, it’s even harder. But Jane King, a mortgage adviser with Ash-Ridge Private Finance thinks rates are unlikely to fall: ‘The general consensus is that fixed rates cannot go much lower as lenders would be unable to make a reasonable profit margin. Tracker rates are forced to follow Bank of England base rates and again, there is little room for these to reduce much further.’

    What is a good interest rate for a mortgage?

    Two per cent is the benchmark you should be aiming for, according to Peter Gettins of London and Country mortgage brokers. He says that there are lenders offering this rate on a range of products, from five-year fixed rates (if you want to borrow up to 75 per cent of the property’s value) to fee-free two-year fixes on 90 per cent loan-to-value. You can even get a seven-year fixed rate at just under two per cent.

    Can you negotiate a better rate for a mortgage?

    You can’t haggle the rate down like you can with home insurance. But if you haven’t reviewed your mortgage deal in a while, and especially if you’re on the standard variable rate, there’s a very good chance you can get something better, says London and Country’s Peter Gettins. ‘Lenders are increasingly pretty good at looking after their existing customers,’ he says, ‘and frequently offer them the same rates as new customers – sometimes even better.’

    What’s the best time period for a fixed-rate mortgage?

    best mortgage rates

    Image credit: Colin Poole

    How long your fixed rate mortgage lasts for depends entirely on your own circumstances and budget. ‘A family with small children in an area with good schools who have no plans to move may well look for a five or even ten-year fixed rate,’ says Jane King of Ash-Ridge Private Finance. ‘A young, single person who wants to move for their career, might want the flexibility of a much shorter fixed rate.’

    If you compare a two-year fixed rate and a five-year one, with the same fees and charges, the fees on the two-year mortgage will work out more expensive on a ‘per year’ basis. It sounds obvious, but it’s easy to focus on the headline interest rate, which will be lower on a two-year fixed rate deal.

    While there are lots of two and five-year fixed rate mortgages, there aren’t so many mortgage lenders offering them for ten years or more.

    Check the early repayment charge, especially if you’re choosing a longer fixed rate. It’s typically a percentage that reduces over time and it varies widely between lenders – and fixed rate mortgage deals.

    Fees and mortgage rates

    It’s not just the mortgage rate itself you need to take into account, but the fees charged by the lender. Most lenders charge an arrangement fee (which is often around £1,000 – or even more). There may be a booking fee, although these are less common. Some lenders offer two versions of their mortgage deals; one with a fee and one that’s fee free. If you have a smaller mortgage, it’s worth comparing the fee-free option.

    You’ll normally have to pay a valuation fee and legal fees as well, although the lender may make a contribution towards these.

    What is an overall cost for comparison?

    When you’re looking at mortgage deals, you’ll see the phrase ‘overall cost for comparison’ or APRC (annual percentage rate of change) next to an interest rate. This is a standardised figure, provided by the lender, to show overall interest rate for the duration of the deal. It includes the cost of the mortgage, plus any fees and charges that you have to pay.

    It’s a useful figure because it helps you compare deals that may look similar on the surface (e.g. same headline rate) but work out rather differently when all the costs are taken into account.

    With a little preparation and either the help of a professional mortgage broker, or some research, you should be able to find a great mortgage deal.

    We continually check thousands of prices to show you the best deals. If you buy a product through our site we will earn a small commission from the retailer – a sort of automated referral fee – but our reviewers are always kept separate from this process. You can read more about how we make money in our Ethics Policy.

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