At The Mortgage Hut, we're experts in finding the right deal for you, selected from a range of thousands of products from over ninety lenders and designed to fit your personal circumstances.
How to get the best interest rate on a mortgageThere are four main factors in getting the best interest rate possible:
- Finding the right mortgage provider
- Minimising the mortgage lender’s risk
- Choosing the right type of mortgage
Our team will work with you and assess your personal circumstances, finances and employment to select the best mortgage deal for you at the best possible rate.
Minimising riskMortgage lenders want to be assured that their investment in you is a wise one. They do this through comprehensive risk assessment, taking into account as much as they can about your situation so that they can lend with the confidence that each month you can manage the mortgage payment.
The more you can do to lower their risk, the better a rate you will be offered. The mortgage market is competitive, and if you are a strong investment, then providers will be keen to secure your business.
Tip 1: Come to The Mortgage Hut for the best mortgage deals!
Loan-to-value (LTV)Loan-to-value is one of the largest single factors when it comes to your mortgage interest rate. It represents the amount of investment in the property the mortgage company are making, and the lower the amount, the less their risk.
It is sad to immediately think about when things go wrong, but that is how a lender must think. In the background, there is always the knowledge for them that if you miss your monthly payment, they have the right to repossess the property and sell it.
It is important, therefore, for the mortgage lender to know that if the very worst happens, that the sale of the property will recoup the full value of the loan.
When selling a property, mortgage lenders may not be as patient to find the right buyer as the homeowner, and most properties are sold at auction for less than their market value. For this reason, there needs to be some value in the home that is not covered by the mortgage.
The larger your deposit, the lower the LTV of the mortgage. A deposit of 10% represents a 90% LTV mortgage, 15% deposit is 85% LTV and so on. By increasing the size of your deposit, you lower the LTV of the mortgage and thus the risk to the lender.
Those with enough capital to need a mortgage of 60% LTV or less are able to command a far better mortgage deal on interest rate than those struggling to find a 10% deposit.
Tip 2: Increase your deposit to lower risk.
Credit historyYour credit history is a six-year report on your financial dealings. If you have clean credit, your score will be high and you will be seen as a low risk investment. CCJs, defaults, IVAs and more will show you as being a far greater risk.
While we do work with specialist mortgage lenders who focus on bad credit customers, there is no getting around the truth that the better your credit report, the less risky a proposition you represent.
Tip 3: Improve your credit rating to show strong money management.
Affordability and debt to income ratioA high debt to income ratio means your money is stretched to meet your current commitments usually resulting in high monthly repayments. A low level of affordability can show an inability to properly budget and avoid unnecessary expense. The mortgage lender will consider both a problem when making a risk assessment.
Clearing off debt and avoiding frivolous spending will give you a much stronger financial position. It may be hard and take time, but it’s a good investment for your future.
Tip 4: Pay off debt and budget well to improve your financial standing.
Joint applicationsGetting a mortgage with a spouse or partner is a more secure proposition than doing it alone. Lenders are keen that the adults in the home share the responsibility of the mortgage payment; doing so lowers the overall risk as it generally increases overall income and improves affordability.
If your partner has a particularly poor credit history or no income, you may want to consider a sole application rather than run the risk of having them on your application.
Tip 5: Buy as a pair with your spouse or partner to share responsibility.
Employment factorsThe stability of your employment is another key factor in determining your risk. If you're in a stable job with a long history of employment, you will be seen as significantly less risk than someone who is still in their probationary period or has just started their own company.
It may not be possible to change your employment status to a more preferable one, but if it is something you have control over, it is worth consideration when applying for a mortgage.
Tip 6: If possible, present your employment status in the most stable way.
A guarantorIf you are struggling to meet the criteria for a mortgage then getting someone who is a homeowner (usually a parent) to guarantee your mortgage can make all the difference.
It can be a significant decision for your guarantor, whose home may be at risk by supporting you, but may result in great deals becoming available.
Tip 7: If you are struggling, consider asking a parent for help.
TimingSituations that can affect the interest rate
Understanding the market and the impact of external factors to the Bank of England base interest rate can be complicated, but it can also pay off hugely when choosing the exact timing of your mortgage application.
At The Mortgage Hut we have a team of advisors who follow the various factors than can affect national interest rates very closely. They can help you estimate how different events may alter your mortgage deal.
Current events, such as the recent election and Brexit have a major impact on the nation as a whole and have made waves regarding interest rates. Contact us to understand the current market situation and if your timing is flexible, consider waiting until it’s the right time to buy a property.
Tip 8: If you are able, keep an eye on current affairs or get advice regarding timing.
Understanding your personal timingIt isn’t just international politics that have an effect on the timing of your mortgage application - your own personal circumstances may benefit from a step back.
Many applicants would find their applications were improved through a little more work on their credit rating, especially if there’s something in the past that would benefit from a little distance.
Extra months give you more time to save for a deposit.Extra months give you more time to develop your employment status, especially if you are self-employed or in a probationary period.
Tip 9: If waiting improves your situation, often it’s worth doing so.
Choosing the right type of mortgageWhen you come to select your mortgage product, there will be multiple options available. You may be interested in a fixed rate mortgage for two, three, five or even 10 years where you prioritise keeping the initial rate.
Or, you may trust the market enough to go straight for a variable rate mortgage with no year fix, or you may be looking at the buy-to-let mortgage market.
Speaking with an expert at The Mortgage Hut is going to help you understand the options available to you. We'll give you the opportunity to look through a range of providers, from traditional banks and building societies to newer specialist lenders and challenger banks.
Tip 10: Speak to The Mortgage Hut to get a full explained overview of your options.
Getting the best mortgage interest rates for a remortgage
One of the primary reasons for considering a remortgage is to take advantage of your improved situation and find a deal with a better interest rate. If your fixed mortgage term has come to an end and you have been put on the lenders Standard Variable Rate (SVR) then it’s usually a good time to shop around a little!
As you have been making payments on your mortgage, the chance is very high that your LTV has dropped and you’ll be able to command a superior deal. There are factors such as mortgage arrangement fees and early repayment fees that can hinder a remortgage.
At, The Mortgage Hut we’re fully understanding of the terms and conditions of mortgages and can help you make a decision that properly benefits you in the long term.
To learn more about how to improve your interest rate through remortgages, why not read our comprehensive selection of articles?
Improving rates with The Mortgage Hut
At The Mortgage Hut we are always doing our utmost to improve the rates our customers get. With our wide network of lenders, extensive experience of the market, and understanding of many external factors, we believe we are the best mortgage advisory service in the UK - and our customers agree!
Use our mortgage calculator to get an idea of your affordability before you start comparing mortgages. Or use the contact form and one of the team will be in touch with you shortly to answer all of your queries.