How to get a good mortage rate
Navigating the world of mortgages can be a daunting task, especially when you’re looking to purchase a new-build home. With so many options available, it’s easy to feel overwhelmed by the jargon and endless choices. But don’t worry—finding a good mortgage rate doesn’t have to be a complicated process.
In this guide, we’ll explore some key considerations to keep in mind while you hunt for the best mortgage rates, specifically tailored to new-build homes.
Understand the Different Types of Mortgages Available
Before diving into the search for the best mortgage rates, it’s essential to familiarize yourself with the types of mortgages available. For new-build homes, some popular options include:
- Fixed-Rate Mortgages: These mortgages have an interest rate that remains constant throughout the term, providing stability and predictability in your monthly payments. This can be an attractive option if you prefer to budget without surprises.
- Tracker Mortgages: Tracker mortgages follow the Bank of England’s base rate plus a set percentage. While they can offer lower rates initially, they fluctuate with the market, which means your payments could increase if interest rates rise.
- Help to Buy Schemes: For new-build properties, schemes like Help to Buy can offer equity loans to help with the purchase, reducing the amount you need to borrow from a mortgage lender. Be sure to check the eligibility criteria and terms before applying.
Knowing which mortgage type suits your financial situation and preferences can help you narrow down your options and focus your search for the best rates.
Consider the Advantages of New-Build Homes
New-build homes come with their own set of advantages that can play a role in your mortgage decisions. For instance, many new-builds are more energy-efficient than older properties, which could result in lower utility bills. Additionally, new-build homes often come with warranties and are built to modern standards, reducing the need for costly repairs and maintenance.
These factors can make new-builds an appealing option, potentially influencing your choice of mortgage. Some lenders even offer special rates or incentives for buyers of new-build properties, so it’s worth exploring these options.
Shop Around for Mortgage Deals
Remember, rates aren’t the only factor to consider. Look at the whole package, including arrangement fees, early repayment charges, and the overall mortgage term. Sometimes a lower interest rate might come with higher fees, so weigh the total costs to ensure you’re getting the best deal.
One of the best ways to find a good mortgage rate is to shop around. Don’t just settle for the first offer you receive—different lenders offer different rates and terms, so it’s important to compare. Use mortgage comparison websites, consult with mortgage brokers, and visit your local banks to get a comprehensive view of what’s available.
Improve Your Credit Score
Your credit score plays a significant role in the mortgage rates you’re offered. Lenders use your credit score to assess the risk of lending to you—generally, the higher your score, the better the rates you’ll be eligible for.
To improve your credit score, make sure you’re paying bills on time, keeping credit card balances low, and avoiding too many applications for credit in a short period. Check your credit report for any errors and get them corrected if needed. Even a slight improvement in your credit score could open the door to better mortgage deals.
Get Pre-Approved
Obtaining pre-approval for a mortgage can be a game-changer in your home-buying journey. Pre-approval not only gives you a clear idea of how much you can afford, but it also shows sellers and builders that you’re a serious buyer.
While pre-approval isn’t a guarantee of the final mortgage offer, it can provide a useful benchmark as you continue to shop for the best rates..