Finding the right mortgage deal

Cheap mortgage finding
How to find the best deal for you

Securing the right mortgage or remortgage deal has the potential to save you £100s every month. Given that current mortgage interest rates are quite high, making an uninformed choice could lead to significantly overpaying. This guide provides a step-by-step approach to help you identify the most suitable mortgage deal, find a reliable mortgage broker, and understand other essential information.

Step 1: Do a 10-min search for mortgage deals online

Before diving into the search for mortgage deals, we’ll assume you already have a basic understanding of mortgages and know the type of deal you’re aiming for. If that’s not the case, you might want to check out our guide on choosing the right mortgage type first.

Once you’re clear on the mortgage you want—whether it’s a fixed, variable, discount, or a more specialized option—it’s time to start exploring the rates available to you. These rates will largely depend on your deposit size and the property’s value. Generally, the larger your deposit relative to the property’s value (referred to as ‘loan to value’), the better the rates you’ll likely secure.

So, as you begin your search for the best mortgage deal, the first thing you need to understand is:

‘NEVER just go to your bank for a cheap deal.’

Your current bank will only present you with its own selection of offers, not the full spectrum of options available, making it less likely that you’ll find the best deal for your needs. However, it’s still worth reviewing what they have as a starting point.

Benchmark a good mortgage rate using ExEconomics Best Buys tool

There are numerous mortgage comparison websites available, yet none can promise to display every deal on the market. The complexity of the mortgage market, with some offers exclusive to specific brokers, makes it challenging for any comparison site to have a complete overview at all times. However, our Mortgage Best Buys tool includes all direct deals and most broker-accessible options, making it an excellent starting point.

Don’t use the APRC to compare – it’s mostly meaningless

All lenders are required to provide you with the APRC – the effective average annual interest rate assuming you keep your mortgage for the full term (typically 25 years). This can be frustrating, as this rate is usually irrelevant since you likely won’t ever pay it.

For instance, if you have a fixed rate of 3.49% for two years, which then reverts to 4.74%, the APRC might be about 4.3%.

So why do we say it’s mostly meaningless?

• You never actually pay 4.3% since it’s an average over the entire mortgage term.
• You’re likely to remortgage well before the end of the term.
• The standard variable rate it reverts to is likely to fluctuate.

What really matters are the initial rate, the fees, and the rate it switches to once your deal concludes.

Step 2: Now talk to a mortgage broker

After using our Mortgage Best Buys tool to find a competitive rate, your next step should be to check if a qualified mortgage broker can offer an even better deal.

Mortgage brokers explore the market extensively to find a suitable mortgage deal for you. By working with one, you can quickly access a wide range of lenders and gain added leverage to improve your chances of approval. Additionally, they offer an extra layer of protection in case anything goes wrong.

They can also provide guidance on various homebuying programs, like Shared Ownership, if you’re eligible—so make sure to inform your broker early on if that’s what you’re interested in.

Experienced mortgage brokers are invaluable due to their deep understanding of lenders’ criteria. For example, they might know if a particular lender won’t finance properties located above shops or in council housing, enabling them to suggest a more appropriate lender.

The main goal is to choose a broker you feel confident working with. Often, the real estate agents you encounter during your house search will suggest brokers, and they might even share the same office space. However, you’re under no obligation to use these brokers, even if you purchase a property through that particular agent.

It’s a good idea to ask friends who have recently moved for referrals, as many local brokers offer excellent service. The objective is to find a broker who provides the best service at the most affordable rate. Keep in mind that not all brokers offer the same range of options.

Here are the three crucial questions to ask brokers…

1. Can you get me a mortgage from any UK lender, right now?

This helps you determine whether your broker can access ANY UK mortgage. Not all brokers have this capability, so it’s crucial to understand who you’re working with. Here are some possible responses:

• ‘No.’ Some brokers are limited to one lender or work with a small panel, meaning they search fewer deals. This approach makes their operations simpler and more cost-effective.
• ‘We check all products available to brokers.’ Pay attention to the phrase – available to brokers. This was once known as ‘whole of market.’ Many such brokers may exclude lenders and products that are only accessible directly to the public, primarily because they don’t earn a commission on them. Additionally, they might not be able to submit an application on your behalf.
• ‘We check all lenders.’ Some brokers do include lenders’ direct-only deals in their searches. However, these brokers are more likely to charge a fee. It’s important to note that no broker can realistically guarantee access to EVERY mortgage, as some exclusive deals are arranged between specific lenders and brokers (or clubs that brokers can join).

Be clear about what your broker is offering. Consider the importance of checking every deal, your willingness to do some research on your own, and whether you’re comfortable paying a broker fee. Once you find a broker you trust, ask the next set of questions to determine if they’re the best fit for your needs.

2. Do you charge a fee?

This explains how brokers earn money from your mortgage arrangement. Brokers typically have two potential income streams:

• Commission: Nearly all lenders pay brokers a ‘procuration fee,’ which is usually around 0.35% of the loan amount (£350 per £100,000). This commission is based on the size of your mortgage and does not impact the cost of your mortgage. Brokers are required to disclose the exact amount they’ll receive before you proceed with your application. You can find this information alongside the ‘Key Facts Illustration,’ which they must provide before you apply.
• Fees: Brokers may also charge you a direct fee. This fee might be in addition to the commission or instead of it (meaning they charge you a fee and refund the commission). If they give you the option between a fee or commission, they can describe themselves as ‘independent.’ If not, they can’t, which can be a bit confusing.

No trustworthy broker should charge more than about 1% of the mortgage amount, even for clients with a poor credit history. If your broker charges more, it’s best to walk away. Fees can be imposed at any stage of the process, as long as you’re informed about them upfront. However, avoid any broker who demands large fees before completion. If the deal falls through, you will likely still have to pay.

Since this is a ExEconomics site, we’ve always recommended avoiding fees when possible. Look for a fee-free broker (one who earns through commission) who can offer advice on the widest range of mortgages available.

3. Are you qualified?

It’s important to verify that a broker is appropriately qualified to give you financial advice. Ensure that you’re working with a certified mortgage adviser, ideally one who holds the CeMAP qualification, which is highly regarded in the industry. Your broker should evaluate your specific needs and eligibility prior to suggesting the most appropriate mortgage product for you. This approach not only helps in finding the best option but also provides you with greater consumer protection.

If you receive incorrect advice, the Financial Ombudsman can look into any potential issues. However, if you select a product based on an information-only service, you won’t have recourse if the decision proves to be unsuitable.

How to find the top UK mortgage brokers

With a clear understanding of your needs, we’ve focused on reviewing several prominent mortgage brokers with a national presence, as it’s not feasible to cover every broker in the UK. Additionally, we’ve included methods to locate local brokers who offer face-to-face consultations. If you have any reservations about a broker, feel free to explore other options—there’s no harm in consulting multiple brokers before making your final choice.

Top mortgage brokers

(1) L&C Mortgages, Habito, Better.co.uk and Moneybox Mortgages are free to use as they charge lenders commission. Trinity Financial, Fluent Money and Mortgage Advice Bureau can charge a fee – however, they waive their fees if you use the links above. (2) If you’ve got a poor credit report, Better.co.uk can charge a fee.

Want to find a local face-to-face broker? You can find ones near you by entering your details on Unbiased.co.uk* or VouchedFor*.

I’ve had credit problems in the past – do I need to go to a specialist broker?

If you’ve experienced credit issues, regardless of their extent (refer to our Credit Scores guide for more information), and are in the process of arranging a mortgage, exercise caution with those ‘specialist poor credit’ brokers who seem to be everywhere.

These brokers frequently impose exorbitant fees, preying on the belief that such services are your only option. However, there’s no necessity to resort to these specialists; many standard brokers (including those mentioned above) also handle the ‘sub-prime’ market and offer their services at the usual fee rates.

Am I allowed to speak to more than one broker?

Most brokers only charge fees once your mortgage is finalized, so there’s no harm in seeking multiple opinions—there’s often wisdom in consulting several brokers to find the best option.

Be sure to monitor whether brokers are submitting an Agreement in Principle without your explicit consent, as this could trigger a hard credit check on your report. Frequent hard checks might negatively impact your credit score, potentially leading to less favorable mortgage terms (refer to our Credit Scores guide for more details).

Additionally, various brokers may offer exclusive deals from lenders, though some might require a small fee to secure these offers. Large national brokers often have their own exclusive deals, while local brokers might access special rates through broker networks. Always consider whether the advantages of an exclusive deal outweigh any associated fees.

I’ve heard some brokers do cashback – how do I get this?

It’s important to inquire about the commission your broker earns for securing your mortgage. This information should be listed on the final page of the mortgage illustration and typically ranges from 0.35% to 0.5% of the mortgage amount. For a mortgage of £100,000, this means the broker’s commission, or ‘proc’ fee, would be between £350 and £500.

You should also ask if the broker is willing to offer any part of their commission back to you as cashback when the mortgage is finalized, particularly if you are also paying a fee for their services.

Negotiating a rebate is more feasible with larger mortgages, where the combined fee and commission exceed £1,000. However, the broker is not obligated to agree to this, regardless of the total compensation they receive from arranging your mortgage.

Step 3: Then check deals that most brokers miss

If you utilized our Mortgage Best Buys tool to compare rates before consulting a broker and it couldn’t surpass your rate, chances are you’ve already covered this ground.

If your broker claims to provide information on all available deals in the market (and not just the ones they can arrange for you), this aspect should already be addressed. It’s a good idea to double-check, but you’ve likely already secured the optimal deal.

However, if you worked with a traditional broker, there’s a possibility that some deals might be overlooked. This is because some lenders have withdrawn from the broker market to reduce costs. Some lenders don’t permit brokers to access their deals at all, while others reserve certain deals exclusively for direct transactions.

To be thorough, compare the best offer from your broker against these three types of mortgages that might not be included:

• Lenders that don’t operate through brokers

Yorkshire Bank and First Direct are two examples of lenders that don’t offer their deals through brokers, you’d have to apply direct.

Yorkshire Building Society also doesn’t work with brokers, though it does deal with them through its own broker brand, Accord. Brokers who say they search the whole market should include direct-only deals in a comparison, but they don’t have to offer to help you purchase these.

• Lenders that don’t offer all their deals through brokers

You’ll have to put in a bit of effort to find these deals. Some lenders work through brokers while others offer their deals only directly. It’s a reminder that simplicity can sometimes be elusive!

Occasionally, direct deals can offer better rates (though this isn’t always the case). Thankfully, ExEconomics Mortgage Best Buys tool can help you track down the top offers and let you know whether they’re available through brokers or exclusively direct.

• Exclusive deals from other brokers

The last category includes offers that are available solely through specific broker networks, as these brokers often strike exclusive agreements with lenders. While we can’t include all of these deals in our best buys tool, they make up a relatively small part of the market. For thoroughness, you might want to consult several brokers.

To accurately assess different deals, first identify the most favorable offer a broker can provide, then compare it with the best deals available through our Mortgage Best Buys. Use our Compare Two Mortgages or Compare Fixed-Rate Mortgages calculators to determine the cost of each option.

Step 4: Check mortgage paperwork

You could almost create a small library with all the paperwork you receive when securing a mortgage or remortgage. Here are the key documents you should be familiar with:

Key Facts Illustration

The Key Facts Illustration lives up to its name. It provides the essential details about a mortgage product—highlighting the primary facts rather than every single detail. You should receive one of these documents before you submit your application, and it’s crucial to review it thoroughly. Here’s what to keep an eye out for:

• Does it have the Key Facts logo on it? (Shown above)
• Does it have the correct date on it?
• Does it have your name on it?
• Does it state who has created it? This will be your broker’s details, or the lender if you’ve gone direct.
• Does it say if you’ve been recommended the product?

If all the necessary information is included, make sure to file and retain the illustration. If any details are missing, request a revised version from the lender or broker. This document serves as essential proof in case of disputes with your lender, showing what advice was given, by whom, and when. Since your lender won’t store this document indefinitely, it’s important to keep it in a secure place, as it might be years before you need to refer to it again.

The mortgage offer

After you’ve completed your mortgage application and it’s been approved, the lender will send you a mortgage offer. This document contains comprehensive details about the mortgage and outlines the terms and conditions of the loan you’re agreeing to.

While it may require a bit more reading, it’s crucial to thoroughly review it and ensure that all the information is entirely correct. Pay close attention to:

• Mis-spelled names or incorrect loan figures. This could stop the mortgage at the very last minute, resulting in delays, additional expense, jeopardising the purchase and even more scarily, losing the mortgage offer completely.
• Anything unexpected, particularly info that contradicts your Key Facts Illustration. Pay particular close attention to fees, early repayment charges and the conditions you need to meet to complete (as it’s your solicitor’s job to check you’ve met these before the money can be drawn down).

Your broker is expected to review the mortgage offer, but you shouldn’t depend solely on their assessment. If you end up disagreeing with any aspect of the offer later on, it could be challenging to contest the issue if you’ve already signed the document agreeing to the terms.

Step 5: Watch out for the hard sell

Certain lenders and brokers may seek to increase their profits through other aspects of the mortgage process. Therefore, be ready for aggressive sales pitches regarding these additional products.

Mortgage payment protection insurance (MPPI)

Often referred to as Accident, Sickness, and Unemployment insurance (ASU), Mortgage Payment Protection Insurance (MPPI) is designed to cover your mortgage payments if you suffer an accident, fall ill, or lose your job.

While the Government provides some assistance in these situations, it typically only covers interest payments. Therefore, it’s wise to evaluate how you would handle mortgage repayments in the event of such occurrences before committing to a mortgage.

Although MPPI can be a beneficial policy, it can also be expensive and has faced issues with mis-selling in the past. Mis-selling often occurs because insurers might not conduct thorough checks at the time of application, but only when a claim is made.

If you foresee a potential risk to your job, it’s advisable to secure a guarantee that any new MPPI policy will indeed provide the necessary payout if needed.

What to ask before taking out MPPI

If you do decide to take out an MPPI policy, check carefully:

• That it will pay out if you claim
• When it will pay (you may have to wait several weeks before the policy kicks in)
• How much it’ll pay and for how long (it usually only covers your repayments for 12 months)

Ensure you understand all the terms and conditions before signing on the dotted line.

Buying MPPI from your mortgage broker. Exercise caution when purchasing through your mortgage broker here, as they might not secure the most competitively priced policy for you. While brokers often provide advice covering the entire market, they might be limited to a single insurer or a small selection of them.

It’s wise to request a quote for Mortgage Payment Protection Insurance (MPPI) from your broker, but ensure you also compare it with other available policies to determine if it’s the best option.

Bundled buildings / contents insurance

When securing a mortgage, all lenders will require you to have buildings insurance, and this is typically a condition for receiving the loan. However, be cautious if a lender insists that you purchase the insurance through them. While the initial premium might appear reasonable, you could be locked into paying whatever price increases they impose in future years, throughout the duration of the mortgage.

Lenders might charge an administrative fee of about £25 if you choose to decline their insurance offer, but this fee is usually recoverable from the insurance provider you select instead. Exploring other options for your home insurance can lead to significant savings. In fact, by using cashback websites, some individuals have even received money for signing up for insurance. Check out our Home Insurance Guide for more details.

Life cover from your mortgage seller

Just because a financial professional sold you one product doesn’t mean they’ll automatically offer you the best deal on additional services like life insurance or other types of coverage.

If you’re buying your first home, it’s likely the first time you’re considering life insurance. However, don’t feel pressured to accept the first policy you’re offered. In many cases, you could save up to 50% on the life insurance provided by your lender or broker.

Ken shared his experience: “Some friends of mine were paying £42 and £51 per month for mortgage life insurance through their broker. After exploring other options on your site, they found quotes elsewhere for just £9 and £11 per month, which is a significant savings over a 25-year term.”

For comprehensive advice on finding the most affordable life insurance, refer to the guides on Life Insurance and Mortgage Life Insurance.

Ready to get a mortgage? We’ve lots more guides, tools & tips to help…

• Mortgage Best Buys. Find top mortgage deals.

We’ve handy mortgage calculators too, including…

• Basic mortgage calculator