by Mark Johnston
How do you decide between all the different mortgage deals out in the market at the moment to ensure that you are getting the best deal and the right deal for you?
The standard variable rate mortgage is a cheap option and benefits from few restrictions and penalties. On the other hand, some trackers are also quite modest in price and their longer term often present as better value for money in the longer term.
Picking a mortgage deal based on how cheap it is may not be the best marker of how useful the rate is for you. What you should also keep in mind is the benefit that each mortgage rate will give you.
Trackers should be compared to where the base rate is and fixed deals should be compared to average historical rates at the same length of time. By basing te comparison on this detail you will be able to fairly compare like for like. Standard variable rates are different again but these can be compared against the other, if you know how.
Short Term Trackers, two or three year mortgage deals are risky when they run at 1.5 to 2.5 per cent above base rate. These are good when the base rate is low but can quickly become expensive when the Bank of England base rate rises substantially.
There are sensible deals out there at the moment but you should be prepared to either save hundreds per month while time are good or be prepared to over pay when rates go up. These deals are sustainable if you can ride the rollercoaster of Bank of England base rate changes.
ING Direct offer a 2.04 per cent two year deal with a LTV rate of 0 per cent which is quite good but there are fees running into the £900 mark on this deal so be careful. First Direct offer a similar mortgage rate of 2.29 per cent for the same time period at a LTV per cent of 65 and arrangement fees of only £500. You will have to do some number crunching to figure out which of these deals would be better for you.
Nationwide has recently taken off their gloves are have begun offering good deals on mortgages. For a three year mortgage deal you can have a 3.19 per cent when you have a LTV rate of 70 per cent and only £250 in fees. For a similar fee you can have an 80 per cent LTV and Nationwide are offering a 4.19 per cent deal for three years.
Lifetime Trackers can often be better than some of the short term tracker deals out there. There are no early repayment penalties with many of these deals which makes them more attractive due to their flexibility.
HSBC Bank plc offer a 2.39 per cent rate for the term of the loan with an arrangement fee of £500 at a LTV rate of 60 per cent. First Direct, part of the HSBC Banking Group offer a 2.49 per cent mortgage deal for a fee of about £500 with a LTV of 65 per cent.
Read on tomorrow to see my evaluation of the remaining deals out in the market today.
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