The best mortgage rates can make the vital difference to how much you'll be paying for a mortgage – and how much you will have left for other things at the end of the months. Yet securing a great mortgage rate has a little more to it than simply choosing the lowest interest rate or smallest monthly repayment amount.
Mortgages come with different terms, conditions, and fees, and it's understanding how all of those factors work together that empowers you to get the best possible mortgage deal for your circumstances. Don't worry – it's not too complicated, and with a bit of solid advice and practice, you'll soon know what you should be looking for.
Whether you are about to take out your first mortgage, remortgage your current home, or just want to see if you could secure a better rate, use the online mortgage calculator form below to compare mortgages from top lenders. You can also search for buy to let mortgages if you're planning to buy a house to let out.
Habito will engage in an online chat with you, advising you on the next stages, helping you assess affordability and give you impartial advice to ensure you get the best deal for you. Use their mortgage comparison calculator below to find the best mortgage for you.
Please note: Habito is an online mortgage broker and whole of market lender so they will assess the best deals available and work out which works for you. We have an affiliate relation with Habito and take a small percentage of commission for referring you to them.
Why February 2020 is the best time to find a great mortgage deal
There is a number of factors that make this February in particular an auspicious month for securing a great mortgage rate. While some uncertainty around the outcomes of Brexit remains, so far the UK economy has avoided a recession, and the property market is recovering in light of that. Yes, that does means that property prices are rising again, but price increases are quite small, and with a more buoyant property market comes a welcome increase of the number of properties listed for sale.
At the same time, interest rates on mortgage repayments remain remarkably low, which puts buyers in a strong position to secure great fixed-rate deals. We expect things to get quite busy this summer, with quite a few more property sales compared with last year, so we'd avoid the increased competition and get that house purchase moving now.
What is the best time of year to get a mortgage?
There are several questions to consider here, but the most important ones are: are you a first-time buyer or remortgaging, and what type of home are you considering?
If you are a first-time buyer, these last few weeks of winter are very important. Even with the reported housing market bounce-back, it's still relatively slow in comparison to spring. If you want more negotiating power to get the lowest price on the home you want (and therefore a smaller mortgage loan), then the last two weeks of February are a great time to secure that house purchase.
Wait until mid-March, on the other hand, and you will see a different landscape, with its own advantages and drawbacks. The property market traditionally gets busier with the arrival of spring – this is when families begin looking at homes with the aim of moving during the summer holidays. If you're after a family home, you'll have more choice – but be prepared to have little if any bargaining power. In that sense, those remortgaging to a larger home are in a better position.
If you are a first-time buyer looking to buy a smaller home (a one-bed flat, for example), you have the luxury of February and March being similar in terms of prices and what's on offer – but we wouldn't advise leaving it until late spring/summer when competition is generally stiff for any type of property.
In short: there is no particular time of year that's necessarily better to apply for the mortgage itself, but your house hunt and your mortgage application are inevitably interconnected; the quicker and easier you are able to find an affordable property, the better the mortgage deal you'll be able to get.
Finding the best mortgage rates: the importance of the deposit
If there is just one useful thing to know when looking for a mortage, it is this: the bigger your deposit, the better the deal you'll get. This is true always, with any lender. The very best mortgage rates are only available to buyers with deposits of over 25 to 30 per cent (and 40 will get you the cream of the crop of mortgage deals). We strongly recommend trying to save up for a slightly bigger deposit, even 15 per cent rather than 10, before applying for a mortgage. Remember: the smaller your loan, the better the rate. If you only have a small amount saved up and really want to own a home soon, consider government equity loan schemes such as Help to Buy.
How to find the best remortgage deal
The answer is: start looking as far in advance of switching lenders as you can, and keep a lookout. Remortgaging only ever makes sense if it's going to be financially beneficial; for example, if your current lender is going to charge you an exit fee, you'll want to make sure that your new repayment plan is worth that penalty. Conversely, if you see a great fixed-term deal that'll allow to start saving (for example), exit fees notwithstanding, go for it.
Finding the best holiday let mortgage deal
With the staycation trend booming, you might be thinking about taking out a holiday let mortgage. Finding the best mortgage rates for this type of mortgage is very important, because these type of mortgage require bigger deposits and usually come with higher interest rates. They can be worth it if your holiday let makes a decent return, but you'll want to make sure you're on the best possible rate to maximise the property's potential.
How to find the best mortgage deal if you're self employed
Accessing the best mortgage rates if you're self employed will hinge on three things: how much you have saved for a deposit, your earnings, and your record keeping. Needless to say, all three need to be up to scratch, and the more you have on all three fronts, the more likely you are to get a good deal on your mortgage. Mortgage lenders dislike applications they deem to be high risk, and you want to convince them that, even though you are self employed, you're financially stable.
Find out more about self employed mortgages in our guide.
How to find the best guarantor mortgage
Guarantor mortgages are the new crop of what used to be called 100 per cent mortgages, and they do allow you to get a mortgage without a deposit – if you have family who are able and willing to keep some of their savings in an ISA account for a few years. The differences between the different products available are mainly about the interest rates on the savings and the number of years the money will need to be used as the guarantee on your mortgage. Find our more in our guide to guarantor mortgages.
Is a fixed-term mortgage always the best deal?
Fixed-term mortgages are very, very popular right now, and with good reason: they allow you to fix your interest rate for one, two, or five years, and in some cases even longer. But is this type of deal always the best one? The answer depends mainly on what your plans are for the near future: if your first house purchase is not the home you're planning on staying in for a long time, be careful with long fixed-term mortgage deals, as they almost always come with a financial penalty for an early exit.