Loan Articles

Getting the best mortgage rates is simpler than it has ever been. A few hours of work can save thousands of pounds before tax; even a few minutes with a mortgage calculator can save a large amount of money on mortgage rates. A mortgage refinance can cut payments by as much as half if done in a systematic way.

The two main things that should be done to lower monthly repayments are to look at extending the life of the loan (although this increases total repayments) and to find the lowest interest rate. Putting in savings to reduce the balance of a mortgage at the same time will often have an effect on the loan, and as savings rates are rarely as high as mortgage rates and are often taxed the rate of return will be better.

The lowest mortgage rates are not always on the price comparison sites, as some companies will not pay a listing fee to all the comparison sites. This means that to get the best mortgage rates it is sometimes advisable to look directly at the website of mortgage companies to get the best current mortgage rates.

Specialized Mortgages - Reverse Mortgage and Second Mortgage

There are more specialized forms of mortgage loans such as a reverse mortgage or a second mortgage and here mortgage interest rates are crucial in making the right decision.

A reverse mortgage is a way of supplementing a fixed income, usually a pension. Here a sum of money is advanced on a home. This is paid off by a mortgage on the home, where the mortgage interest payments roll up against the loan. When the home is sold (usually when the homeowners die) the money is then paid off. In this case getting the best mortgage rates are fundamental as the amount of money advanced will be directly tied to whether or not the lowest mortgage rates are obtained.

A second mortgage is when a person gets a loan against a house but this loan is subordinated to an existing mortgage so that if the house were to be repossessed then the mortgage will be paid off last. This means that the mortgage interest rates on these tend to be higher. As well as comparing interest rates it is also a good idea to make sure that the second mortgage does not get to 100% of the house value as these loans can have far higher rates than those loans which give the mortgage companies some room for comfort.

Mortgage Insurance

One hidden cost of mortgages is often mortgage insurance. This is rarely included in interest rates, but can cost thousands of dollars. Mortgage insurance is often required by lenders on loans where the borrower has a low deposit, often less than 20% of the value of the house, and some lenders require mortgage insurance on higher deposits.

With mortgage insurance there are ways of reducing the cost. Firstly it is a good idea to shop around for suppliers. The second is to reduce the amount that is being paid. For people looking at a mortgage refinance it may be a good idea to try to reduce the amount of the mortgage being sought by either using savings or temporarily borrowing the amount so that the sum goes below 80%.

If a borrower were to be looking for an 82% mortgage then the reduction by 2.5% could actually be multiplied three or four times thanks to the reduction in insurance. For someone looking at buying anew the ways to reduce the loan are to pay separately for fixtures and fittings or reducing the price through negotiation. If the amount being borrowed is 70% to 80% of the loan then it is always important to check that the conditions do not include that mortgage insurance is taken out as what looks like the lowest mortgage rates can soon seem not as competitive as mortgage interest rates are supplemented by mortgage insurance premiums.