Mortgage Rates Comparison Sites – Do They Give You the Whole Story?

If you are contemplating your first mortgage as a first time buyer, or a remortgage of your existing loan, you would probably think that researching the best mortgage rates would be as simple as going to the nearest price comparison site, answering a few straightforward questions and applying a few filters to suit your mortgage rate requirements.

Now for price comparison sites that make millions from online financial arrangements, that view is one that they try to foster, indeed actively promote. Why wouldn’t they? It makes them millions. Giving advice requires expertise, time effort, adherence to strict Financial Services Association rules, and above all a desire to really make sure the most appropriate advice is provided, even if the advice means no income is generated for the adviser.

Oh, but that doesn’t make money. Far easier to place the decision with the client, and allow them to make the decision. Now I’m all for people power, and people taking responsibility for their own actions, but does it make sense for the largest financial commitment most of us ever consider to come without even the smallest amount of mortgage advice.

Having spent more than ten years providing mortgage advice online talking to people from all walks of life, I am of the firm believe that advice should be made compulsory. All too often I have seen the consequences of an ill considered decision causing problems later on. Mortgage rates believed to be fixed only to turn out to be a discounted rate, where the mortgagee misunderstood that the discount rate was fixed, not the actual pay rate. Those with extended redemption penalties that they had just not realized were present because they hadn’t read the documentation correctly. They were only really concerned about the monthly payment.

Well if you are considering a mortgage, and what mortgage rates will be suitable, my advice would be that you talk to an Independent Financial Adviser. Fee or no fee, seeking advice will always save you money in the long run.

For those that don’t feel professional advice is for them, perhaps just consider the following points when mulling over which mortgage rates are best for you.

Attitude

Do you have a real understanding of the differences between the different types of mortgage rates? Has media hype, adverse publicity or the advice of friends lead you to discount a particular type of mortgage that may be suitable for your needs.

Changes in Circumstances

Do you know what you will be doing in two, three, five or more year’s time? Do you plan to start a family? Is there any expectation that your income may go down? Do you expect a promotion, relocation, and if you did, would you retain the property and let it out lender permitting, or sell it? Might you move abroad, and would that impact on the mortgage repayment type considered?

Early Repayment Charges

Does the mortgage have one, and if so is it just during any product period such a three year fixed rate, or does the penalty extend beyond the benefit period leaving you with the prospect of paying the generally higher lender standard variable rate, or the payment of a penalty which is often equivalent to six months interest?

Can the mortgage be transferred to a new property without incurring the redemption penalty?

Portability

Whilst most mortgage rates are portable to a new property some are not. For those that are you should be aware that portability is not a ‘Right’, but rather just a feature of the mortgage product. To transfer a mortgage to a new property you will still need to meet the lenders underwriting criteria again, and the property will still have to be a suitable security. Also consider the repayment method you select. If you expect to move frequently, is a repayment mortgage advisable? Or would you be better of with an interest only loan and a savings plan that is independent of the mortgage?

Overall APR / Cost for Comparison

Which mortgage is the cheapest, and how do you assess it? Is the cheapest mortgage the best mortgage, after you take all the other factors into consideration? Total cost comparison is a good place to start however. Beware though, as this is the one calculation that many online mortgage sourcing systems do not provide. Comparing the total cost over a given period which includes all the relevant fees and charges will provide a list of products in total cost order. Whether the one at the top is the most appropriate mortgage is a different question.

Affordability

The monthly payment is always a major consideration. Typically a two year discount or tracker mortgage rate will provide the lowest overall cost over that period. Fixed rate security often comes at a premium. Would it be cheaper if interest rates were to rise? How much could they rise before the fixed rate mortgage becomes a better option? And more importantly if they were to rise at what point would the loan become unaffordable?

Flexibility

Does the mortgage allow for overpayments or underpayments where an overpayment has been made? Will it allow for the offset of mortgage interest against a linked savings account? Can you switch from repayment to interest only in the event of financial difficulty? Can you select if overpayments will reduce the term or the monthly payment?

The above are just a few considerations, and can often leave you more confused than before you started, and this is often when the lowest monthly payment becomes the main factor for mortgage rates selection.

The reality is that most mortgage rates are unable to satisfy all your needs, and seeking advice ensures you know which mortgage rate is the most appropriate for your needs having considered all the important factors.

Home Loans For First Time Home Buyers

The prospect of becoming a proud homeowner is an exciting one – but with so many options available, it can be overwhelming too.There’s a lot to understand about mortgages and the terms behind them. What type of mortgage is best? How much will you really pay in interest? How much home can you afford? These are all great questions – but there’s no “one size fits all answer”. There are, however, several things you can do to help make sense of the home buying process.

Using Financial Calculators

There are a wide variety of online financial calculators that can help you crunch the numbers and try out different home loan payment scenarios. Simply answer a few basic questions, such as how much of a down payment you want to make, what the property taxes are for your area, and what type of mortgage you’re interested in, and the calculator can help you determine how much you’ll pay each month. And that’s not all. You can also use mortgage calculators to see how much you’d save in interest by making scheduled pre-payments once a month or once a year, and determine the right home price for your budget.Aurora Bank (Equal Housing Lender, Member FDIC) has many different home loan calculators that you can use.

What Are the Added Costs?

There are several smaller costs that can quickly add up if you’re a first time home buyer. There’s PMI, which is mortgage insurance that the lender will require if you are paying a lower down payment amount on the home. This insurance helps protects the lender’s losses in the event a default. (It is important to understand that this insurance does not protect you as the borrower.) There are also closing costs to consider, and property taxes as well as home insurance costs to factor into your budget. It can seem overwhelming, but many home loan financial tools and lending experts can help you create a manageable budget that will help you realize your dream of home ownership along with a payment plan that’s realistic and attainable.

How Much Can You Save?

Because everyone has different expectations, financial needs and home requirements, there’s no perfect answer to “the best home loan” question. What you can count on is that your lender is willing to work with you to develop a plan that helps you reach your dream of owning a home. Take the time to do your research, learn what you can afford, and then consult with a lending professional on the next steps. Together, you’ll be able to create a customized plan of action that works for you.

Don’t Be Fooled by the Promise of Low Mortgage Rates

Conversations between new home owners usually include comparisons of their low mortgage rates, and discussions of where they found them. Much of a good mortgage broker’s business is referral business from satisfied customers who pass their information on to their friends and acquaintances.

Another side of the conversation is when individuals are fooled into believing the low mortgage rates being offered to them are in fact the lowest or that the mortgage they chose was the best option for their situation.

Choosing a mortgage broker to guide you through the process of choosing a lending institution can be an excellent option if you choose carefully. Unfortunately, many mortgage brokerages are more interested in making sales than they are in providing excellent service, and will not advertise the lowest rates.

Fortunately most people are smart enough to not do business with these companies. So when you find a good mortgage broker with competitive rates you will not only be certain that their low mortgage rates are legitimate offers, but that the mortgage you choose is also a good fit for your needs.

Low mortgage rates aren’t the only thing to consider when choosing a mortgage. It’s important to also determine whether the mortgage payments will be feasible not only now but in the future as well.

Working with this reputable and experienced brokerage will allow you to make the best choices, while saving you from common mistakes.

Low mortgage rates aside, it’s important to have help deciding between a fixed rate mortgage, and a variable rate mortgage. Both have their advantages and offer very different benefits. A good mortgage broker will help you to understand why low mortgage rates aren’t the only thing to consider when choosing your home loan. With their many years of experience and satisfied customers, you will be certain to get the best offers and the best customer support in the business.

Visit your good mortgage broker today to see what they can offer, as well as to learn more about what makes a mortgage a great fit for you and your family. You can be assured of an honest representation of interest rates and a broker that will listen to what you are looking for in a mortgage and offer you suggestions and options to suit your needs. Let them show you why choosing a mortgage with low interest rates is just the beginning, and what it means to work with a competent mortgage broker.