Comparing the best mortgage rates on the market can be a great way to start researching your borrowing options. However, it is key to consider other factors too.
Back in December 2021, the Bank of England’s base rate sat at 0.1%. Since then, it has increased 14 consecutive times to 5.25%.
These increases have put strain on the property market, with mortgage rates following a similar trajectory. So if you’re in the market for a new deal, then we’ve listed some of the best rates below.
This article explores:
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Will I pay more for my mortgage in 2023?
Most borrowers coming off fixed rate deals will be paying more on their mortgage this year.
This is because the Bank of England’s base rate now sits at a 15 year high, and was much lower when these borrowers last sought a fixed rate deal.
Back in 2021, the typical two year fixed mortgage rate was 2.25%, according to Moneyfacts, a data firm. This meant someone borrowing £250,000 over 25 years would pay £1,090 a month for that initial term.
Fast forward to today, and someone borrowing the same amount on this term would pay £1,683 a month.
Likewise, the average five year fixed deal more than doubled from 2.91% in October 2018 to 5.97% this month.
Read more: Six steps to consider if your fixed-rate mortgage deal is ending soon
How can I get the best mortgage rate?
While it’s impossible to control all factors influencing your mortgage rates, there are steps you can take to enhance your odds of landing a favourable deal, according to Mansi Behl, Lead Mortgage Broker at Koodoo.
“Securing the best mortgage rate involves a combination of preparation, research, and negotiation,” she said.
Below we’ve listed some of these measures you can take:
Enhance Your Credit Standing
Lenders across the country will take into account your credit score when passing you through their affordability checks.
So before this takes place, it may be worth reviewing your credit report for any inaccuracies. In addition, it is also important to stay up-to-date with your bill payments and to reduce your existing debts where possible.
Explore Your Options
Utilise digital tools for mortgage rate comparisons and gather rate quotes from diverse lenders, including traditional banks, building societies, and online entities.
A great place to start is by using our mortgage comparison tool which you can find below.
Engage a Mortgage Specialist
“Brokers can provide access to a wider range of lenders, often revealing more competitive rates and terms,” said Behl.
In addition, a good mortgage broker should have a good understanding of the market. So if you’re unsure of whether you want to take out a fixed or variable rate, a broker can give you personalised advice to guide you through your decision.
Read more: Should I use a mortgage adviser?
By being proactive about your credit health, comparing wisely, and staying updated, you’ll be well-placed to snag the most favourable mortgage rates out there.
Should I only look at the best mortgage rates?
While rate plays an important role when looking at your mortgage options, there are other important factors to consider.
One of these are the fees that are charged on top of the mortgage.
Some of the lowest rates on the market typically come with higher than average fees, which may make the overall cost of your mortgage more expensive than other options.
Read more: What are the costs of buying a house?
What else should I consider when choosing the best mortgage rate?
In addition to fees, there are other parts of your mortgage deal to consider. Below we’ve listed some things to consider:
- Overpayments – Overpayments are additional contributions you can make towards your mortgage to reduce the interest you owe. Most lenders allow you to overpay up to 10% of your mortgage before charging you a penalty fee. However, this isn’t always the case, so if you would like this option it is important to check your lender’s terms and conditions.
- Early repayment charge – If your lender does allow you to overpay on your mortgage, then it might charge you an early repayment charge. Otherwise known as a redemption or exit fee, this will likely come in the form of a percentage of your mortgage value.
- Incentives – Some lenders offer incentives to entice new customers and reduce the cost of their mortgage. These typically take the form of cashback or a complimentary service, like a free valuation.
Compare your options with our best buy tool
In addition to mortgage fees, all of these factors can all be found when you use Koodoo’s comparison tool.This is how the tool works:
- You can search and compare mortgage deals
- It only takes a couple of minutes and no personal details are required to search
- Once you’ve got your result, you can speak to a mortgage broker if you want advice
Product information is provided on a non-advised basis. This means that no advice is given or implied and you are solely responsible for deciding whether the product is suitable for your needs.
What is the best rate for remortgage borrowers?
Below are some of the lowest rates for remortgage borrowers, correct as of 5 October.
APRC: 8.3%
Upfront fees: £1,034
Max LTV: 60%
Additional notes: This mortgage is only available to Premier Banking customers. It also comes with £350 cashback.
Representative example: A repayment mortgage of £250,000 payable over 25 years, on a fixed rate of 5.25% for 2 years and 2 months, and then on a variable rate of 8.74% for the remaining 22 years and 10 months. You would be required to make 26 payments of £1,498.12 and 274 payments of £2,015.93. The total amount payable would be £592,000.14 made up of the loan amount plus interest (£340,966.14) and fees (£1,034). The overall cost for comparison is 8.3% representative.
APRC: 7.9%
Upfront fees: £1,495
Max LTV: 65%
Additional notes: This mortgage comes with £350 cashback and is only available for properties in England and Wales
Representative example: A repayment mortgage of £250,000 payable over 25 years, on a discounted rate of 5.29% for 2 years, and then on a variable rate of 8.24% for the remaining 23 years. You would be required to make 24 payments of £1,504.02 and 276 payments of £1,940.48. The total amount payable would be £572,665.37 made up of the loan amount plus interest (£321,170.37) and fees (£1,495). The overall cost for comparison is 7.9% representative.
APRC: 7.9%
Upfront fees: £1,020
Max LTV: 60%
Additional notes: This mortgage comes with free legal fees.
Representative example: A repayment mortgage of £250,000 payable over 25 years, on a fixed rate of 4.90% for 5 years and 2 months, and then on a variable rate of 9.49% for 2 years, and then on a discounted rate of 9.24% for the remaining 17 years and 10 months. You would be required to make 62 payments of £1,446.95 and 24 payments of £2,055.10 and 214 payments of £2,021.76. The total amount payable would be £572,710.76 made up of the loan amount plus interest (£321,690.76) and fees (£1,020). The overall cost for comparison is 7.9% representative.
APRC: 6.5%
Upfront fees: £850
Max LTV: 75%
Additional notes: This mortgage comes with free legal fees and is only available for properties in England and Wales.
Representative example: A repayment mortgage of £250,000 payable over 25 years, on a discounted rate of 5.34% for 5 years, and then on a variable rate of 7.00% for the remaining 20 years. You would be required to make 60 payments of £1,511.42 and 240 payments of £1,726.08. The total amount payable would be £505,794.61 made up of the loan amount plus interest (£254,944.61) and fees (£850). The overall cost for comparison is 6.5% representative.
What is the best rate for moving home?
Below are some of the lowest rates for home movers, correct as of 5 October.
APRC: 8.3%
Upfront fees: £934
Max LTV: 60%
Additional notes: This mortgage is only available to Premier Banking customers. It also doesn’t come with incentives.
Representative example: A repayment mortgage of £160,000 payable over 25 years, on a fixed rate of 5.33% for 2 years and 2 months, and then on a variable rate of 8.74% for the remaining 22 years and 10 months. You would be required to make 26 payments of £966.36 and 274 payments of £1,290.86. The total amount payable would be £379,756.24 made up of the loan amount plus interest (£218,822.24) and fees (£934). The overall cost for comparison is 8.3% representative.
APRC: 7.9%
Upfront fees: £1,940
Max LTV: 65%
Additional notes: This mortgage comes with no incentives and is only available for properties in England and Wales.
Representative example: A repayment mortgage of £160,000 payable over 25 years, on a discounted rate of 5.29% for 2 years, and then on a variable rate of 8.24% for the remaining 23 years. You would be required to make 24 payments of £962.58 and 276 payments of £1,241.91. The total amount payable would be £367,809.04 made up of the loan amount plus interest (£205,869.04) and fees (£1,940). The overall cost for comparison is 7.9% representative.
APRC: 6.3%
Upfront fees: £1,516
Max LTV: 60%
Additional notes: You’ll need an HSBC Premier Account to access this rate. Also, this mortgage comes with no incentives.
Representative example: A repayment mortgage of £160,000 payable over 25 years, on a fixed rate of 4.81% for 5 years and 2 months, and then on a variable rate of 6.99% for the remaining 19 years and 10 months. You would be required to make 62 payments of £917.72 and 238 payments of £1,093.37. The total amount payable would be £318,636.79 made up of the loan amount plus interest (£157,120.79) and fees (£1,516). The overall cost for comparison is 6.3% representative.
APRC: 6.5%
Upfront fees: £600
Max LTV: 75%
Additional notes: This mortgage comes with no incentives and is only available for properties in England and Wales.
Representative example: A repayment mortgage of £160,000 payable over 25 years, on a discounted rate of 5.34% for 5 years, and then on a variable rate of 7.00% for the remaining 20 years. You would be required to make 60 payments of £967.31 and 240 payments of £1,104.69. The total amount payable would be £323,764.55 made up of the loan amount plus interest (£163,164.55) and fees (£600). The overall cost for comparison is 6.5% representative.
Are mortgage rates going down?
In the middle of September, The Mortgage Works was the first lender since June to offer a sub-5% mortgage. Since then a variety of lenders have followed suit, including Virgin Money which is listed above in our best buy tables.
Whether these rates will continue to fall remains to be seen and will be dependent on how the market expects interest rates to fluctuate.
While there is no way of knowing what will happen to interest rates, it is unlikely that the Bank of England will make any reductions until inflation is under control.
Read more: Will UK mortgage rates go down in 2023?
Should I consider a fixed or variable rate?
One of the main benefits of a fixed mortgage deal is that it offers a degree of certainty. If you take out a fixed deal today and the Bank of England is forced to continue increasing interest rates, then you’ll be protected from these rises over your term.
However, the opposite is also true. If the Bank of England feels the need to lower its base rate then you could end up paying a more expensive mortgage.
Read more: Should I get a long-term fixed rate mortgage?
This is where a variable deal has its benefits. A tracker mortgage, for example, will mimic the movements of the Bank of England’s base rate. So if interest rates begin to fall so will your monthly repayments.
Important information
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