Mortgage comparison: Best mortgage deals

There’s no universal measure of what makes a “best” lender – it’s more about which one offers what you need and what’s important to you.

However, there are definitely qualities that mortgage-hunters typically look for in a lender – such as low-interest rates, low fees and generous terms. Many consumers also want lenders with a great track record in customer service.

• Popular providers

Updated March 30th, 2020

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Name	Product	Best for
First Direct		Customer service might not be too important throughout the term of your mortgage. In fact, if you make repayments on time every month, you may not need to communicate with your mortgage provider at all. However, if you fall behind on repayments or want to make changes to your mortgage, great customer service suddenly becomes integral. First Direct has won many awards for sterling customer service over the years, including “Best Customer Service” and “Most Recommend Bank” at the 2017 British Bank Awards.	Compare now More Info		loading Fetching your data...
HSBC		HSBC tends to be a strong choice for those looking to switch mortgages. This bank regularly appears at the top of 75% mortgage tables for fixed-rate mortgages, whether you’re looking for two, three or five-year terms. It offers a free standard valuation, and you’ll often be able to make payments and overpayments (subject to conditions).	Compare now More Info		loading Fetching your data...
Halifax Mortgages		Halifax is part of Lloyds Banking Group, which was the most commonly used UK mortgage lender in 2019 (based on gross lending amounts). When you explore its range of mortgages, it becomes obvious why Halifax is so popular. It regularly appears at the top of the comparison tables for fixed-rate mortgages with various terms. There are also plenty of competitive tracker and buy-to-let mortgages to choose from. Some mortgages are designed to suit first-time buyers, while others will appeal to older borrowers. Halifax regularly tops the comparison tables for mortgage with a 60% loan-to-value or lower. It recently raised its upper age for mortgage owners to 80. Many large lenders have since followed suit. While there are plenty of smaller building societies with no maximum age limit at all, they usually struggle to compete with the rates on offer from Halifax.	Compare now More Info		loading Fetching your data...
Leeds Building Society Mortgages		Leeds Building Society regularly appears at the top of buy-to-let mortgage comparison tables. It offers fixed-rate, tracker and variable-rate buy-to-let mortgages. There are mortgages specifically for Small Houses in Multiple Occupation (HMOs).	Compare now More Info		loading Fetching your data...
Nationwide Building Society mortgages		Nationwide Building Society is worth a look. It also offers 95% mortgages, plus first-time buyers will get £500 cashback upon completion. It is happy to consider mortgages linked with first-time buyer schemes, such as Help To Buy, Shared Ownership and Right To Buy. You may also want to check out its range of Family Deposit Mortgages, which allows family members to gift a deposit.	More Info		loading Fetching your data...

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• How to search for the best lenders

  In spite of our recommendations, it’s important to do your own research to learn which lenders will work best with your situation.

  Many people will search for the best mortgage deal through price comparison websites. These websites will list the cheapest deals based on the criteria you select. However, some lenders don’t appear on these websites and some price comparison websites prioritise affiliate lenders, even if they’re not the best.

  Alternatively, you could use a mortgage broker. This individual has expert knowledge of mortgage providers’ lending criteria, which could be invaluable if you have a low income or have unique circumstances. They’ll search for the best deal on your behalf, including those that are only available through broker services, so you can feel confident about being recommended a deal that you’ll actually be approved for. You’ll pay a fee for their services though.

How mortgages work

Whether you’re buying a house, unit or apartment, most of us don’t have enough money tucked away to cover the full purchase price. In order to get the full amount needed to buy a property, we need to borrow money through a mortgage.

A mortgage is an arrangement where you borrow money from a lender to buy a property, whether as a home or investment (such as a buy-to-let). It usually lasts for between 25 – 35 years.

In exchange for allowing you to borrow this money, your lender will charge you interest. This can be either a fixed rate mortgage at a certain rate, or a variable rate mortgage.

You’ll usually pay your mortgage off in instalments known as repayments. These are usually required every month.

A mortgage can also be known as a home loan or as home finance.

Largest lenders by market share

Best mortgage rates 2020

Fixed-rate mortgages continue to be popular in the UK due to the reliability of knowing how much you need to pay each month. However, finding and keeping the best fixed mortgage rate can be problematic. Many deals often start with a low, fixed-rate but often switch into a higher variable rate after a set period of time. This means you can end up paying more than you expected if you end up on the variable rate.

We have created a number of tables each of which shows a list of mortgage lenders and the rates they have for certain deals with different criteria.

Best fixed-rate mortgage rates for 2020

• Best 2 year fixed rate mortgages
• Best 3 year fixed rate mortgages
• Best 5 year fixed rate mortgages

• Which bank offers the best mortgage rate?

  While there is a range of factors to consider when choosing a mortgage lender, interest rate is probably one of, if not the, most significant. There’s no one “best” bank for this though, as each lender will cater for different individual circumstances and rates will vary over time. This is why it’s important to identify what you’re looking for and compare lenders based on your own criteria.

• Which factors should I take into account when choosing the best rate?

  The introductory rate is one of the most important factors to consider when comparing mortgages, but it doesn’t tell the whole story. Here are some other elements to take into account.

  • Term length. Fixed-rate mortgages with longer terms have higher rates, but you’ll be protected against potential rate rises for longer. It’s often recommended to apply for short-term mortgages and remortgage once the introductory term ends, but there’s no guarantee you’ll be in a financial position to be approved for a remortgage at that time, which is another reason why some people prefer the security of long-term mortgages.
  • Extra fees. Most mortgage products will have one-off fees attached to them. These should be considered as well as the interest rate. The best way to compare mortgages is to calculate the total amount you’ll spend during the introductory term. The main fee to look out for is an “arrangement fee”. This often adds up to several hundred pounds, even though some mortgage products don’t include this at all. Some lenders will give you the option to add any fees onto the mortgage, but this should be avoided whenever possible, as it will mean paying interest on them for the entirety of your mortgage term.
  • SVR (standard variable rate). This is the rate you’ll be switched onto after the introductory rate ends. It’s best to remortgage before you’re moved on to this significantly higher rate, but that’s not always possible, so it’s worth bearing this rate in mind.
  • Total repayable. This is the total amount you’ll owe over the length of your mortgage. This won’t be too important if you’re planning to remortgage after the introductory term ends, but it’s still a useful figure to help you compare products. The easiest way to reduce your total repayable is to cut the length of your mortgage. Your monthly repayments will be higher, but the amount of interest paid will drop significantly.
  • LTV (loan-to-value). This is the amount of money you’re borrowing from your lender, expressed as a percentage of your property value. With a higher deposit, you’ll be able to access mortgages with a lower LTV ratio. These mortgages have lower rates, plus you’ll pay less interest in total.

What are the different type of mortgages?

You can boil down UK mortgages into the following types:

Fixed rates
Unlike a variable rate mortgage where repayments move up and down, fixed rate repayments remain unchanged for a set period. This means that for the length of your fixed rate term — usually between one and five years, but sometimes as great as 10 or even 15 years — you’ll know what your repayments will be.

Standard variable rates
A variable-rate mortgage is a product which has an interest rate which fluctuates up or down over time as your lender sees fit. Unlike a fixed-rate mortgage where the rate is locked in for a fixed term, the interest rate of a variable rate mortgage moves up and down in accordance with market changes.

Tracker mortgages
Tracker mortgages move in line with a nominated interest rate which is usually the Bank of England base rate. The actual mortgage rate you pay will be a set by your lender at an interest rate above or below the base rate. When the base rate goes up and down, your mortgage rate will go up and down by the same amount.

Discount rate mortgages
A discount mortgage works by setting a discount on a lenders standard variable rate (SVR). This means the interest rates can go both up or down in line with the SVR.

Interest only
Standard mortgages have repayments that include both the interest and a small proportion of the capital. If you remove this capital portion from the equation, you can reduce the amount you make in repayments each month. This can be good for some borrowers, including investors and those building a property, but there is an added risk with this type of mortgage as your
amount doesn’t reduce, meaning you will still have to pay the whole capital off at the end of the term.

Offset mortgages
Offset mortgages are linked up to your savings account and can help to reduce your interest payments. Any money deposited into the account offsets interest on your mortgage. For example, if you have a mortgage of £100,000 and savings of £25,000, your mortgage interest is calculated on £75,000 for that month.

This cuts the amount of interest you pay but the mortgage rate is likely to be more expensive than on other deals. You can still access your savings if you need to but the more you offset, the quicker you’ll repay your mortgage.

Capped rate mortgages
This is a type of variable rate mortgage but one with a limit or cap on how high your interest rate can rise. So you can benefit from low interest rates but also enjoy the comfort of knowing that your interest rates will never exceed a certain level.

Cashback mortgages
When you take out this kind of mortgage you also receive some money back. This is normally a percentage of the mortgage.

Flexible mortgages
This option is available on many other types of mortgage and it allows you some flexibility when making repayments. You can choose to pay more when you can afford it and if you have already overpaid then you can pay less or take a payment holiday. These types of mortgages tend to have higher interest rates than other deals.

95% and 100% mortgages
These types of mortgages are designed for people that either have no deposit or are struggling to save a significant deposit. Loan-to-value rates of 95% or 100% typically incur higher interest rates. Although they were previously widely offered, 100% mortgages fell out of favour after the financial crisis, and now only tend to be offered when a family member is able and willing to provide a guarantee secured against their own residential property.

Buy-to-let mortgages
Buy to let mortgages are for people who want to buy a property and rent it out rather than live in it themselves. The amount you can borrow is at least partly based on the amount of rent you expect to receive.

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Mortgage fees

1. Upfront fees

• Mortgage arrangement fee. This is the fee that your mortgage lender charges to set up your mortgage.
• Product fee. Many lenders will charge you a product fee which is the cost of choosing a specific mortgage.
• Valuation fee. This is a fee charged by your mortgage lender for them to carry out valuation of the property you would like to purchase the mortgage for.
• Legal fees. A legal professional will need to look over your application to make sure it’s compliant.
• Stamp duty. If your property costs over £125,000 you’ll have to pay stamp duty, which is a certain type of land tax. You’ll usually have to pay this tax as an upfront fee within 30 days of settlement.

2. Ongoing fees

• Repayments. The biggest cost of a mortgage is in the regular repayments you have to make on it. Your repayment amount is set by your lender and takes into account the interest rate, how often you’ll be repaying and the length of the loan.

3. Exit fees

• Early Repayment Charge. If you repay your mortgage early or overpay more than your overpayment allowance some mortgage providers will charge you an early repayment fee.
• Redemption administration fee. This is a fee charged by your lender in order to close your mortgage at the end of the term.

How to find the best mortgage deals of 2020?