Do you know how much you could save with the right mortgage?

Buying a house is the biggest investment many will make, and choosing the correct mortgage is a vital part of this. There is a huge variety of mortgage deals available and all differ slightly, so it is important to understand how the system works in order to find the best deal for you.

Choosing a mortgage is often a long-term commitment, though the type of mortgage you are on can often be changed. Buyers will initially sign up to a 25 year agreement, though in the first three to five years will usually be free to change the type of mortgage. If on a fixed rate mortgage, the amount of interest you pay will be fixed for a certain period of time and will remain unchanged until an agreed date. Interest paid with a tracker mortgage is dictated by the Bank of England rate: it will the same as, or a percentage either way of this, until a fixed date.

Some buyers think the best deals can be found in promotions offered by mortgage companies. These involve attractive rates for a number of months or years, though are not permanent.

There are ways you can save by being savvy with your mortgage choice. Most importantly – shop around. The market is huge and the array of deals equally so. many websites offer comparison tools and calculators to tailor quotes to your personal situation.

Be aware of early payment charges (the ‘redemption charge’) if you have the time and commitment to regularly switch mortgages you can save a great deal, so a mortgage with low or no charges may be suitable. Mortgages often incur additional fees which can be added to your monthly repayment. As these can escalate it is always a good idea to pay as much of this cost upfront.

Your initial deposit will affect your monthly repayment, and a ‘loan to value’ system means the larger your deposit, the less you will have to pay. Saving as much as possible for your deposit is therefore a great way to save money in the long-run.

It may be worth looking beyond the high street, especially if you are looking for a larger mortgage, i.e. £1 million or more. Private banks often offer better interest rates and can be more flexible about mortgage arrangements. Private banks can be found in the UK as well as overseas.

By equipping yourself with a full understanding of mortgages and the deals available it is possible to save money whilst still ensuring you find a deal that works for you.


Thomas Grey graduated from the London School of Economics in 2009 with a BSc in Economic History. He has contributed to numerous financial websites and helps people make money around the home through things like selling DVDs for cash.

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