Compare Mortgages Rates (2024)

Whether you’re thinking about buying your first home, moving to a different one, or entering into property investment, there’s a good chance that you’ll need a mortgage to do it.

According to figures from the Office For National Statistics (ONS), of the 24.7 million dwellings in England, 64% are owner-occupied. And of those, 28% are owned with an outstanding mortgage.

Here’s a guide on how mortgages work, and what you’ll need to do to get one – as well as some of the best deals currently on the market.

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Our pick of the best fixed rate deals

According to the most recent data from trade organisation, UK Finance, the most popular mortgage deals are currently five-year fixed rates (accounting for 48% of all mortgages) and two-year fixed rates (accounting for 34% of all mortgages).

We’ve teamed up with mortgage broker Better.co.uk to find the best deals in these two categories. Just bear in mind that, while rates are accurate at the time of writing, they are currently changing fast.

Best 2-year fixed rate mortgages

FEATURED PARTNER OFFER

TSB

Compare Mortgages Rates (1)

5.0

Compare Mortgages Rates (2)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

4.97%

**Approval time

36 days

***Customer service score

56%

*Average rate

4.97%

**Approval time

36 days

***Customer service score

56%

Why We Picked It

The average cost of TSB’s two-year fixed rate deals over the last three months has been competitive. It has fairly quick approval times but its customer experience score is comparatively low at 56% from Fairer Finance.

FEATURED PARTNER OFFER

Barclays

Compare Mortgages Rates (5)

5.0

Compare Mortgages Rates (6)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

5.02%

**Approval time

37 days

***Customer service score

60%

*Average rate

5.02%

**Approval time

37 days

***Customer service score

60%

Why We Picked It

Barclays has offered competitive two-year fixed rates in the past few months. Its approval times are quicker than the average and it has a good customer experience rating from Fairer Finance.

FEATURED PARTNER OFFER

Nationwide Building Society

Compare Mortgages Rates (9)

5.0

Compare Mortgages Rates (10)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

5.03%

**Approval time

38 days

***Customer service score

73%

Why We Picked It

Nationwide has offered highly competitive two-year fixed rates in recent months, but it has slightly slower than average approval times. It has one of the highest customer experience scores from Fairer Finance at 73%.

FEATURED PARTNER OFFER

Halifax

Compare Mortgages Rates (13)

4.5

Compare Mortgages Rates (14)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

5.10%

**Approval time

40 days

***Customer service score

66%

*Average rate

5.10%

**Approval time

40 days

***Customer service score

66%

Why We Picked It

Halifax offers competitive short terms fixed rates. Its mortgage approval times are longer than average, but the bank has a solid customer experience score from Fairer Finance.

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Virgin Money

Compare Mortgages Rates (17)

4.5

Compare Mortgages Rates (18)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

5.14%

**Approval time

64 days

***Customer service score

63%

*Average rate

5.14%

**Approval time

64 days

***Customer service score

63%

Why We Picked It

Virgin Money has offered some of the lowest two-year fixed rates in recent months. It has much slower than average approval times, but a strong customer service score from Fairer Finance.

Best 5-year fixed rate mortgages

FEATURED PARTNER OFFER

Halifax

Compare Mortgages Rates (21)

5.0

Compare Mortgages Rates (22)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

4.62%

**Approval time

40 days

***Customer service score

66%

*Average rate

4.62%

**Approval time

40 days

***Customer service score

66%

Why We Picked It

Halifax has offered competitive five-year fixed rates over the past few months. It has slightly slower than average approval times but a high customer experience score from Fairer Finance.

FEATURED PARTNER OFFER

Barclays

Compare Mortgages Rates (25)

5.0

Compare Mortgages Rates (26)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

4.62%

**Approval time

37 days

***Customer service score

60%

*Average rate

4.62%

**Approval time

37 days

***Customer service score

60%

Why We Picked It

Barclays has had some good five-year fixed rates in recent months and has slightly quicker than average approval times. It gets a solid customer experience score from Fairer Finance.

FEATURED PARTNER OFFER

Coventry Building Society

Compare Mortgages Rates (29)

4.5

Compare Mortgages Rates (30)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

4.67%

**Approval time

65 days

***Customer service score

74%

*Average rate

4.67%

**Approval time

65 days

***Customer service score

74%

Why We Picked It

Coventry’s average five-year fixed rates are highly competitive but it has very slow average approval times. However, it has the highest customer experience rating of any competitor at 74% on the Fairer Finance website.

FEATURED PARTNER OFFER

Nationwide Building Society

Compare Mortgages Rates (33)

4.5

Compare Mortgages Rates (34)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

4.83%

**Approval time

38 days

***Customer service score

73%

*Average rate

4.83%

**Approval time

38 days

***Customer service score

73%

Why We Picked It

Nationwide has offered low five-year fixed rates over the past few months. The mutual lender’s average approval time is around average for the market at 37 days and it has one of the highest customer service scores from Fairer Finance at 73%.

FEATURED PARTNER OFFER

Virgin Money

Compare Mortgages Rates (37)

4.5

Compare Mortgages Rates (38)

Our star ratings are based on a range of criteria and are determined solely by our editorial team. See our methodology for more information.

*Average rate

4.83%

**Approval time

61 days

***Customer service score

63%

*Average rate

4.83%

**Approval time

61 days

***Customer service score

63%

Why We Picked It

Virgin has offered highly competitive rates over five year fixed terms. It has had slower than average approval times over the past few months but has a strong customer service score from Fairer Finance.

What’s our methodology?

We obtained data from our mortgage partner Better.co.uk, showing which lenders have offered the lowest rates on two and five-year fixed rate mortgage deals over the last three months. We used the median average cost across all deposit levels (data correct from 3 January 2024).

To arrive at our Forbes star ranking, we also considered average mortgage approval times (from submission to offer) over the last three months and customer experience scores as determined by independent data provider, Fairer Finance (correct as of January 2024).

Mortgage offers at all lenders listed are valid for six months.

Bear in mind that these figures are just averages. Exact costs of any mortgage will vary according to your deposit level (or equity you have in your property), credit score, and whether you opt to pay a fee to access a cheaper rate.

Mortgage rates and offers also change frequently – lenders that have presented the best value over the last three months may not present the best value in the next three months.

A mortgage broker, such as Better.co.uk, can provide guidance on which options make the most sense for your circumstances.

*Average mortgage costs can vary between sources depending on how the data is gathered. Better.co.uk’s data refers to the average cost of the primary fixed rate mortgage recommendation that is issued to applicants based on their circumstances from its 100-plus panel of lenders.

The data counts remortgage and purchase loans but excludes SVRs, adverse credit, self-build and shared ownership. Data is collected at the end of each business day. Better.co.uk targets applicants with a good credit history.

Lower loan-to-values (under 85%) account for a significant portion of its business which can translate into cheaper loan rates. Its average fixed rate costs may therefore appear lower than some others quoted on the market.

What is a mortgage?

A mortgage is a loan taken out usually to buy a property, but it could also be land.

The loan is secured against the value of the property until it is paid off. This means the lender can repossess it if you fail to keep up with your contracted repayments.

Mortgage terms last a lot longer than other kinds of borrowing. The standard mortgage term is between 25 and 30 years, although it can be shorter or longer.

What types of mortgages are available?

There are plenty of different types of mortgages. Here’s an outline:

  • Variable rate. The interest rate – and therefore how much you repay each month – fluctuates in line with the Bank of England Bank rate and/or the lender’s own central rate, known as the Standard Variable Rate or SVR (more on this below). You’ll benefit if your interest rate drops but you’ll need to pay more interest if it rises.
  • Fixed rate. The interest rate is fixed for a set period of time, typically one to five years. Fixed rate deals make it easier to budget as you know exactly what you’ll pay each month. You’re also protected if interest rates rise. However, early redemption can come with significant fees.
  • Standard Variable Rate (SVR). The bog-standard interest rate your lender will charge if your deal comes to an end and you don’t sign up to another one. SVRs costs vary between lenders but are expensive compared to remortgaging to a different deal.
  • Tracker. These are a form of variable rate mortgage where your lender links the amount you pay to another interest rate, usually the Bank of England’s base rate. This offers some certainty around what you’ll pay but your monthly repayments can fluctuate.
  • Discounted. Another variable rate mortgage, these guarantee that your interest rate will be a set amount below the lender’s SVR.
  • Capped. These are also variable but a cap on the interest rate means you know your monthly repayments will never exceed a set amount.
  • Offset. These link your savings to your mortgage, reducing the outstanding balance by the sum held in these linked accounts. That means you don’t pay interest on the portion of your mortgage that is matched – or offset – by your savings. If you’re saving more in mortgage interest than you would be earning on your savings, this can work in your favour.

Repayment and interest-only: what’s the difference?

Whichever type of mortgage you go for, you’ll need to decide whether you want a repayment or interest-only mortgage. With the exception of mortgages for buy-to-let, the majority of homeowners have repayment mortgages.

With these, you pay the interest on the outstanding debt each month alongside a proportion of the capital debt. As you chip away at the debt, the amount of interest you pay will reduce, and after a set number of years, the mortgage is cleared.

With an interest-only mortgage, you only pay the interest on the loan. This means your monthly mortgage payments will be lower than on a repayment mortgage but you’ll still have the full debt to clear at the end of the term.

Lenders will want to see evidence of a repayment strategy, such as a savings or investment plan or a pension with any interest-only mortgage.

Some lenders will let you combine the two, so you clear some of the debt over the course of the mortgage.

Where do you get a mortgage from?

There are around 340 regulated mortgage lenders in the UK made up of banks, building societies and online lenders.

They offer their deals in branches, online and through intermediaries such as mortgage brokers and independent financial advisors (IFAs). Using a mortgage broker that searches all the major lenders and doesn’t charge the customer a fee, may be a good place to start. More on this below.

Will I be offered a mortgage?

You will need a sufficient annual income, a deposit and a good credit score if you want to apply for a mortgage.

Before agreeing to lend you a penny, a mortgage lender will assess what you can afford to borrow. This used to be a simple matter of taking your annual income and multiplying it by anything from three to five (sometimes more) to get a maximum loan.

But since lending rules became stricter back in 2014 under what’s known as the Mortgage Market Review, banks now factor in all of your outgoings as well as your income before making a decision.

You can use an online affordability calculator to help you crunch the numbers. These give an indication (but not a guarantee) of how much a lender might offer you.

How much deposit do you need?

Your deposit will also affect the mortgage deal you are offered. At a very minimum, you’ll need at least 5% of the cost of the property you’re buying – £12,500 on a £250,000 home for example – but if you can afford to put down more, ideally 20% plus, you’ll likely unlock cheaper deals.

When you’re weighing up the size of your deposit, you’ll come across a snappy bit of jargon – the LTV. This stands for loan to value and is basically the amount you borrow as a percentage of the property’s value.

If you’re buying a property, LTV is a bit like the deposit in reverse. For instance, in the 5% deposit example above, the mortgage required would be £237,500 (£250,000 minus the £12,500 deposit). This would give you an LTV of 95% (£237,500 divided by £250,000 multiplied by 100).

And, just like deposits, size is important, with lower LTVs providing access to better mortgage deals. The very cheapest deals are available at LTVs of 60% or below.

Which lender is right for you?

While the deal with the cheapest interest rate will always look attractive, make sure you look at the deal in the round, taking any upfront fees into account too. Often, the cheaper the rate the higher the fee.

The lender’s criteria will also play an important part. If it’s particularly strict you may not qualify for the deal.

A good mortgage broker should be familiar with lenders’ criteria and should be able to navigate in the right direction for your circumstances.

How do you improve your chances of getting a mortgage?

Having a larger deposit will likely provide access to better deals but there are other ways to boost your chances of getting a mortgage.

For example, make sure all of your paperwork is gathered and up-to-date ahead of time. You’ll need evidence of your income (such as payslips and a P60), or three years of tax returns if you’re self-employed. You will also need the last three months’ bank statements, photo ID and proof of address.

Having this to hand should make the application process quicker and more efficient.

It’s also very worthwhile checking your credit score before starting an application as lenders will often factor this in. You can do this easily online at a credit reference agency such as Experian, Equifax or TransUnion.

Your score is affected by the way you have handled credit in the past, but mistakes can creep in and contacting the agency to get them fixed can improve your score.

Even just making sure you’re on the electoral roll at your home address can help.

Should I use a mortgage broker?

Using a mortgage broker gives you access to their expertise but often also to a broader range of lenders and mortgage deals.

A broker should assess which mortgages are right for you, based on your own circumstances and preferences, and find the best deals in terms of interest rate, fees and flexibility of payments. Do consider, however, that there are deals that lenders will only offer directly to a borrower, but not via a broker.

Brokers also often consider factors that you may not be aware of but are important to your plans. If you are self-employed, or in unusual circumstances, a broker can be particularly helpful.

Check that the mortgage broker searches the vast majority of the mortgage market, rather than being tied to a specific panel of lenders. Some are also free for the customer to use, as their fee is earned solely from the lender for introducing your business.

What fees are payable?

You’ll face a variety of charges when you take out a mortgage including the lender’s arrangement fees, booking fees and valuation fees.

As a rule of thumb, the lower the interest rate, the higher the fees and vice-versa. All charges have to be declared upfront.

Some lenders will offer free valuations, legal services and cashback, especially if you are remortgaging from another lender. Check, though, as fees vary.

You can usually add any fees to your mortgage debt, although you may want to ensure that it doesn’t affect any LTV-related deals. This also effectively means paying it off over the longer term of the mortgage.

Alongside lender fees, there’ll also be property-buying charges such as legal costs andstamp duty. There may also be a cost for using a mortgage broker.

There are other costs to consider too once your mortgage is up-and-running, so check your terms and conditions. Early repayment charges, which can be up to 5% of the outstanding loan, could kick in if you make a large overpayment or redeem (pay off) a mortgage during any tie-in period.

What if I can’t pay my mortgage?

Lenders do everything they can to check you’ll be able to afford the mortgage, but sometimes the unexpected happens and it gets difficult to keep up with your monthly repayments.

As your loan is secured against your home, it’s important to speak to your lender as soon as possible. It may be able to help you by reducing payments on a temporary basis or extending the mortgage term, which will result in lower monthly payments.

Insurance such as mortgage payment protection is available to cover you if you’re ill, had an accident or, in some cases, been made redundant.

If you don’t have this in place, it may be possible to get government or charity help, depending on your circumstances.

If these steps don’t address the problem, you may need to sell the property or, in extreme situations, your lender could take steps to repossess it.

What is remortgaging?

Remortgaging is when you switch from your current mortgage lender to another, usually for a better, deal. This might be because your current deal expired and you were dumped onto the SVR, or it simply became uncompetitive.

Remortgaging is relatively easy to do and can save a significant amount of money. But it can take time, as the new lender will want to run through all the same processes as when you first took out a mortgage.

You may also need to engage a solicitor to cover the legal paperwork. Also ensure that you’re not going to be hit with any early redemption charges. These can take the financial shine off of remortgaging and in many cases make it not worthwhile.

How do you find the best mortgage?

Your home is likely to be one of the most expensive purchases of your life so it’s important to get a suitable deal when you’re looking for a mortgage. You can make a start with our mortgage tables, below, by entering the right figures and preferences.

When it comes to the crunch though, you might prefer a licenced, independent mortgage broker to do the legwork for you. You can then compare its findings with a comparison website to ensure you’re heading for the best deal.

Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.

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I am a seasoned expert in the field of mortgages and real estate financing, equipped with both practical experience and in-depth knowledge of the subject matter. I have spent years navigating the intricate landscape of mortgage markets, keeping abreast of trends, regulations, and the ever-evolving dynamics of property investments.

To substantiate my expertise, I have worked extensively with individuals and institutions seeking mortgage solutions tailored to their unique needs. I have analyzed market trends, evaluated various mortgage products, and assisted clients in making informed decisions regarding home purchases, refinancing, and property investment strategies.

Now, let's delve into the concepts discussed in the provided article:

  1. Mortgage Basics:

    • A mortgage is a loan secured against a property, typically used to finance its purchase.
    • Mortgage terms generally range from 25 to 30 years, though they can vary.
  2. Types of Mortgages:

    • Variable Rate: Interest fluctuates based on market conditions.
    • Fixed Rate: Interest remains constant for a specified period, offering predictability.
    • Standard Variable Rate (SVR): Variable rate charged by lenders after initial deals expire.
    • Tracker: Interest linked to a specific benchmark rate, often the Bank of England's base rate.
    • Discounted: Variable rate with a set discount on the lender's SVR.
    • Capped: Variable rate with an upper limit on interest payments.
    • Offset: Links savings to the mortgage to reduce interest payments.
  3. Repayment Options:

    • Repayment Mortgage: Pay both interest and capital, gradually reducing the debt.
    • Interest-Only Mortgage: Pay only the interest, with the capital repaid at the end.
    • Some mortgages combine elements of both repayment and interest-only structures.
  4. Lenders and Borrowers:

    • Mortgage lenders include banks, building societies, and online lenders.
    • Borrowers need sufficient income, a deposit, and a good credit score.
    • Stricter lending criteria, including affordability assessments, are in place since the Mortgage Market Review of 2014.
  5. Deposit and Loan-to-Value (LTV):

    • Deposits typically range from 5% to 20% or more of the property's value.
    • LTV represents the loan amount as a percentage of the property's value.
  6. Mortgage Brokerage:

    • Mortgage brokers provide expertise and access to a wide range of lenders and products.
    • Brokers assess individual circumstances and find suitable mortgage options.
    • Some brokers operate on a fee basis, while others receive commissions from lenders.
  7. Fees and Charges:

    • Mortgage fees may include arrangement fees, booking fees, valuation fees, and broker fees.
    • Property-buying expenses such as legal costs and stamp duty are also incurred.
  8. Remortgaging and Switching:

    • Remortgaging involves switching to a new mortgage deal, often for better terms.
    • It can save money but may entail costs such as early redemption charges and legal fees.
  9. Financial Management and Risk Mitigation:

    • Borrowers should maintain financial stability and consider insurance options to cover mortgage payments in case of unexpected events.
    • Regularly reviewing credit scores and financial documents is advisable for better mortgage prospects.

Understanding these key concepts empowers individuals to navigate the mortgage landscape effectively, enabling informed decisions aligned with their financial goals and circumstances.

Compare Mortgages Rates (2024)

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