100 Lessons for Successful Property Investing: The Ultimate Guide to Buy-to-Let in the post-COVID ‘New Normal’ (Property Life) by Samantha Latchayya

Author:Samantha Latchayya [Latchayya, Samantha]
Language: eng
Format: azw3
Published: 2020-09-18T00:00:00+00:00

59. The lowest interest rate does not equal the best offer

When looking for a new mortgage, whether financing a new purchase or remortgaging at the end of a fixed term, the first thing people automatically look for is the interest rate. Particularly when looking for an interest only mortgage, we naturally seek out the best interest rates on offer.

However, there are also a few other things worth considering before choosing which mortgage is best for you.

Is the mortgage fixed or variable? A low interest rate on a variable mortgage may be good now but could come back to bite you should interest rates increase later on. Fixed rate mortgages guarantee no nasty surprises but might not be right if you have good reason to believe interest rates may be going down in the near future.

Is the interest rate discounted for a certain time before increasing? Even with a fixed mortgage, companies can increase the interest rate overtime by packaging it as a ‘discounted’ initial rate which will increase after a set period within your fixed term.

Can you make additional repayments? If you can, are there any penalty fees associated with this?

What are the mortgage fees? (Set up fees, exit fees, valuation fees, etc.). It is often the case that mortgages with the lowest interest rates have the highest mortgage fees. Take all fees into consideration when working out your actual costs as it could work out cheaper to pay a slightly higher interest rate that has lower set up fees.

Are there any special offers included with the mortgage packages? Many providers will offer various promotions to entice new customers. This can range from gift vouchers to cashback.

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