Mortgage comparison: How to compare mortgages |
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How to compare mortgages

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Own your own home sooner with a competitive mortgage.

Mortgages are expensive, and a tiny difference in the interest rate can save you thousands in the long run. But there’s more to getting a good mortgage rate than just looking at the rate.

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How do I compare mortgages?

When you’re looking for a home loan, make sure you compare products on rates, fees and features.

1. Interest rates

The interest rate is the biggest cost associated with your loan, which is why you really need to shop around to find the best rate for your loan type. Remember, though, that the interest rate isn’t the only cost associated with a home loan.

2. Don’t forget the fees

When shopping for a mortgage, most people tend to focus on the interest rate, and while it is an essential component that needs to be evaluated, it’s definitely worth checking out what other fees you might be charged. You need to look at annual fees, exit penalties, mortgage insurance, ongoing account maintenance fees, appraisal fees, application fees and more.

What can I do to get the best possible rate?

If you want the best mortgage interest rate possible, there are a few factors that will put you in a better position.

  • Savings. Most lenders will require proof that you are financially responsible. This means that you’re going to have to show that you have some savings. By using your savings as a down payment, you’re also taking on some of the risk, which makes most lenders more comfortable about giving you a loan with a more attractive rate. A good savings history also demonstrates to a lender that you have financial discipline.
  • Good credit history. It’s worth checking your credit file before you apply for a home loan so you don’t run into any nasty surprises. Generally, a better credit score will improve your chances of being approved for a competitive rate.
  • Know your property and financial goals. Do your research and find out what type of loan is most suited to your needs and what the best type of property is for you. Once you know exactly what you’re looking for, it’s much easier to find a mortgage with an attractive rate.

How do different mortgage types affect my monthly payments?

Once you start shopping around for a home loan, you’ll discover that there are different types available. Before you compare them, it’s important you are aware of the most common types of loans, which will enable you to make an informed decision:

Adjustable rate

A adjustable-rate loan features an interest rate that can rise or fall depending on market conditions. These loans usually come with lower interest rates than fixed-rate loans — and more features, too.

The problem with a variable-rate loan is that a sharp increase in the rate could make your monthly payment rise sharply and unexpectedly, making it difficult to pay. A drop in interest rates, on the other hand, can make a variable-rate loan more affordable.

Fixed rate

A fixed-rate mortgage is one where the interest rate is guaranteed not to change for a set period of time, which usually varies between one and five years. Once the fixed-rate period is up, the rate reverts to a variable rate, or your lender may offer the opportunity to fix for another period of time.

These loans sometimes lack the features and flexibility of variable-rate loans but offer certainty that your monthly payments won’t change for the term of the fixed rate.

Crunch the numbers

With a mortgage calculator, you can get a clear idea of how an interest rate will affect your repayments. Use the calculator below to determine how the interest rate on a mortgage and the amount you borrow affect your monthly payments.

Bottom line

Mortgages are complicated and expensive — there’s no getting around that. Luckily, the time you spend researching can pay off big time when you find the best mortgage for you. Look for a combination of low interest rates and useful features to save the most over the life of your loan.


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