Finding the cheapest mortgage is not as easy as it might seem. It can be tempting just compare the interest rate and pick the one that is the best. Many comparison websites will do this for you and it is simple to just enter a few details and then pick the cheapest provider from the list that they give you. However, it is worth spending a bit more time looking into things more.
Firstly, these sites often overlook the fact that each company will have a series of charges. Some charge administration fees for opening the account and they all charge for various things. These charges may or may not be relevant to you, but you need to be aware of what they are. It could make a seemingly good option, seem like a much worse one or make a company with an interest rate on the higher side seem good value.
It is important to find out whether you will be tied in to the mortgage company for a certain number of years. Often, with a fixed rate deal, you have an obligation to stay with the company even if that rate becomes uncompetitive. This might not seem a big deal, but many people are now tied in to high rates and the base rate is extremely low, so they are paying a lot more than many people. These small differences in interest rate may not seem important but if you calculate what a difference it can make over a month, year or ten year term, you will see the difference. For example, if you owe £100,000 and your interest rate is 1% you pay £100 a month, £1200 a year or £12,000 over ten years in interest. If the rate is twice that at 2%, you will pay £200 a month which is £2,400 a year and £24,000 in ten years. It is a significant difference which you need to consider.
Of course, rates do change over the years and you will be able to change your mortgage company if you wish, even if you are tied in it will not normally be more than five years. So plan for the next five or ten years, find what you will think will be the best deal for that time and then keep an eye on the market and swap if you can and if necessary.