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Cheap Mortgage
A house is an expensive purchase, usually the single
biggest thing that anyone will buy during their lifetime, and while a
mortgage makes this kind of purchase possible for many people, it adds
to the total cost of the house – finding a cheap mortgage can save
you a large sum of money.
When looking for a mortgage it is the interest rate that will have the
biggest influence on what the mortgage will cost you, however in most
cases the interest rate is variable and therefore it is impossible to
tell what the future rates and therefore cost will be. The fact that interest
rates are generally based on the Bank of England base rate makes identifying
a cheap mortgage difficult, there are generally two approaches that you
can take to identify a cheap mortgage, as outlined below.
In terms of a variable rate mortgage, the best way to identify a cheap
mortgage is to look at the difference between the Bank of England base
rate and the interest rate that the lender is charging – the lower
this difference is the cheaper the mortgage. Be sure that this difference
is fixed – i.e. if it is 2% above the base rate make sure that it
will stay at 2% above for the duration of the mortgage. Looking at mortgages
in this way gives you a good way of comparing the costs of different mortgages
in order to identify the best cheap mortgage. You should bear in mind
that you will need to take into account any other costs such as arrangement
fees to determine the total cost of the mortgage.
Fixed rate mortgages are far easier to compare like for like, as the interest
rate is fixed and therefore you know exactly what you will be paying,
make sure that you know how long the rate is fixed for as it won’t
necessarily be fixed for the life of the mortgage.
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