Getting a Fair Deal On a Mortgage

2. How can I tell which mortgage rate is best for me?

  • What is the Annual Percentage Rate (APR) on this mortgage?
    • now?
    • what will happen to the rate you have advertised once the discount period (if there is one) ends?
  • Do you work out interest every year or every day?
  • Does your interest rate change when the Bank of England base rate changes? Or does it follow some other rate?
    • Do you change yours straight away or wait?
    • Have you implemented the full interest rate change from last time?

You should shop around for the best deal. The APR should help you do this. Generally the lower the APR, the better the deal but watch out – some lenders advertise mortgages as if the initial low start rate will last throughout the loan when in fact it is almost certain that it will increase once the discount period has ended. Nor does the APR take account of redemption penalties.

If interest is worked out every year rather than every day you pay interest on money you have paid back (if you have a repayment mortgage).

Some lenders do not pass on the full amount of savings when the Bank of England cuts interest rates straight away (equally, the lender may not pass on the full increases in rates, or at least not straight away). It is unlikely that the lender will give you a definite answer on this one, but it is worth seeing what they say.

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