Mortgage rates have dropped dramatically in the last few months, with the average cost of a two-year variable rate deal falling down below 2% as lenders attempt to out-do one another. Experts suggest that mortgage lenders are eager to take new accounts in the uncertain period surrounding the general election.
A spokeswoman from Moneyfacts said: “We are currently seeing lenders outbid each other to offer the lowest possible deal on the market to grab headlines. This is because many lenders are preparing for the eventuality of a base rate rise and looking to gain new customers now in hope of recouping any losses that will occur later on.”
Until then, however, if you’re able to take advantage of these record lows, 2015 could be the best time in recent years to secure a great deal.
But before you rush out and demand a rock-bottom rate, there are a few things you should consider if you want to bag the best deal:
- Enlist the advice of a solicitor as early as possible so that you can streamline the buying process and minimise legal fees. A solicitor can reduce costly delays and help you with property searches, title checks and mortgage issues;
- It’s also a good idea to consult an independent property broker to see what kind of deal suits your financial situation. Over 60% of mortgage deals are now taken out through a broker, as they are able to compare the market on your behalf and can help you to avoid being tripped up by additional requirements, fees and charges;
- Don’t be lured in by a low headline rate – always take into account the full cost of the mortgage including any arrangement fees, valuation fees and legal fees (see our guide to calculating the real costs of buying a house for more info);
- However, if you’re re-mortgaging and prepared to pay an arrangement fee of £300 or more, you could secure a two-year fixed rate of less than 2%;
- Having a large deposit is still the best way to get the best long-term deal. If you have a deposit of 40% or similar equity in a home you wish to re-mortgage, you could currently get a fixed-rate as low as 1%;
- If you only have a small mortgage to negotiate, deals without a fee often work out cheaper than lower rate deals that charge arrangement fees;
- A fixed rate can protect you from rate rises in the future – make the most of the low rate and over-pay as much as possible while your repayments are less;
- Bear in mind that taking out a mortgage has become harder than ever due to the tighter rules around borrowing introduced in April 2014. Lenders will now look more closely at your outgoings as well as your earnings, and are obliged to check that you could still afford to keep up payments should rates increase. This can be hard on older borrowers, or those who are self-employed, along with people who already have a mortgage but do not fit the new criteria.
For advice on buying and selling property in the Thames Valley, or for a free conveyancing quote, get in touch with the property law team at Frances Lindsay & Co. We can help take the weight off your shoulders and ensure you get the best deal for your money.Tags: mortgage rates, property solicitor, property solicitor Beaconsfield, property solicitor Berkshire, property solicitor Buckinghamshire, property solicitor London, property solicitor Maidenhead, property solicitor Thames Valley