If you’re buying your first home or your current mortgage deal is coming to an end, one question tends to appear very quickly:
“What’s the best mortgage rate at the moment?”
It’s completely understandable.
A mortgage is probably going to be one of your biggest monthly expenses, so naturally you want the lowest rate you can get.
But here’s the part that often gets missed:
The mortgage with the lowest interest rate isn’t necessarily the cheapest mortgage.
And the lowest rate you see advertised online isn’t necessarily a rate you’ll qualify for.
I’ve worked with clients where the mortgage with the most attractive headline rate looked like the obvious winner initially, but once we compared the product fee, loan size and overall cost, another mortgage made more sense.
That’s why I’d change the question slightly.
Instead of:
“What’s the lowest mortgage rate?”
I’d ask:
“What’s the best mortgage available for my circumstances?”
There’s a surprisingly big difference between the two.
What Is a Good Mortgage Rate?
There isn’t one mortgage rate that’s “good” for everybody.
The rate available to you can depend on factors including:
- How much deposit you have.
- How much equity you have if you’re remortgaging.
- Your loan-to-value.
- How much you want to borrow.
- Your income and financial commitments.
- Your credit history.
- The property you’re buying.
- Whether you’re purchasing or remortgaging.
- The length and type of mortgage deal.
- The lender’s criteria.
Mortgage pricing also changes regularly.
A lender that’s particularly competitive one week might increase its rates the next.
Another lender might then become more attractive.
So when somebody tells you:
“I’ve just got a mortgage at 4.5%.”
that doesn’t necessarily mean you’ll be able to get the same mortgage.
Equally, you might qualify for something better.
Their mortgage isn’t your mortgage.
Why I Don’t Publish a Single “Best Mortgage Rate”
It would be tempting for me to put a big number at the top of this article:
BEST MORTGAGE RATE TODAY: X%
It would probably get clicks.
But I don’t think it would be particularly helpful.
Firstly, mortgage rates can change quickly.
By the time you read the article, the rate could have been withdrawn.
Secondly, the very lowest mortgage rate in the market might only be available at a particular loan-to-value.
It could have a substantial product fee.
It could be restricted to certain mortgage sizes.
Or you might simply not meet that lender’s criteria.
I’d rather explain how to identify the best mortgage for you than give you a number that could be irrelevant tomorrow.
Your Deposit Can Make a Big Difference
If you’re a first-time buyer, the size of your deposit can affect the mortgage products available to you.
You’ll often see mortgages grouped into loan-to-value bands such as:
- 95% LTV.
- 90% LTV.
- 85% LTV.
- 80% LTV.
- 75% LTV.
- 60% LTV.
Loan-to-value simply measures the mortgage against the value of the property.
For example, if you’re buying a £250,000 property with a £25,000 deposit:
Property value: £250,000
Deposit: £25,000
Mortgage: £225,000
Your mortgage would represent 90% of the property’s value.
That’s a 90% loan-to-value mortgage.
Generally, a lower loan-to-value can give you access to a wider range of mortgage products and potentially more competitive rates.
But that doesn’t mean you should automatically put every pound of savings into your deposit.
Sometimes Keeping Some Savings Is More Important Than Chasing the Lowest Rate
Imagine you’ve saved £35,000.
You could potentially put almost all of it into the house to reach a lower loan-to-value band.
That might give you access to a slightly cheaper mortgage.
Great.
Except you now have virtually no savings left.
Then you move in.
The boiler needs replacing.
The car breaks down.
You discover the previous owner’s interpretation of “recently decorated” was extremely imaginative.
Suddenly, the emergency fund you sacrificed for a slightly lower mortgage rate starts looking rather useful.
When I’m discussing affordability with first-time buyers, I don’t only want to know:
“How much deposit can you put down?”
I also want to know:
“What will you have left afterwards?”
Financial resilience matters too.
The Lowest Mortgage Rate Can Have the Highest Fee
This is probably the biggest reason you shouldn’t choose a mortgage based on rate alone.
Imagine two hypothetical mortgages.
Mortgage A
Interest rate: 4.40%
Product fee: £1,499
Mortgage B
Interest rate: 4.55%
Product fee: £0
Mortgage A clearly has the lower interest rate.
But is it cheaper?
You can’t answer that until you know how much you’re borrowing.
If you were borrowing £80,000, the savings created by the lower rate might not compensate for the £1,499 fee during the initial deal period.
If you were borrowing £400,000, the calculation could look very different.
That’s why I don’t think:
“Which one has the lowest rate?”
is enough.
We need to put the options into pounds and pence.
Product Fees Matter More Than People Think
Mortgage product fees can vary considerably.
You might see mortgages with:
- No product fee.
- A fee around £999.
- A fee around £1,499.
- A fee around £1,999.
- Or other fee structures.
A fee-paying mortgage isn’t automatically bad.
A fee-free mortgage isn’t automatically good.
It depends on the borrowing and the interest-rate difference.
First-time buyers borrowing relatively small amounts can sometimes discover that paying a large fee to obtain a slightly lower interest rate doesn’t save them money overall.
For somebody with a much larger mortgage, the opposite could be true.
That’s why the mortgage amount matters.
Can I Add the Mortgage Fee to the Loan?
Some lenders allow the product fee to be added to the mortgage.
That can be useful because you don’t have to find the money upfront.
But there’s an important distinction between:
“I don’t have to pay it now”
and
“It isn’t costing me anything.”
If a fee is added to the mortgage, your mortgage balance will normally be higher and you may pay interest on that additional borrowing.
That doesn’t mean adding the fee is always inappropriate.
But you should understand the cost before deciding.
What About Cashback and Free Valuations?
These can also change the calculation.
One mortgage might include:
- Cashback.
- A free valuation.
- Free or assisted legal services on a remortgage.
Another might not.
Suppose Mortgage A has a slightly lower rate but Mortgage B provides £1,000 cashback and has a lower product fee.
Mortgage A isn’t automatically cheaper anymore.
Again:
Rate matters.
But so does everything surrounding it.
What Does APRC Mean?
You’ll see something called the APRC, or Annual Percentage Rate of Charge, displayed alongside mortgage products.
It attempts to show the annual cost of the mortgage while taking account of the interest rate and certain fees and charges.
It’s useful information.
But I wouldn’t use APRC on its own to choose between mortgages either.
The calculation generally assumes certain things about how long you keep the mortgage and what happens after an introductory deal finishes.
In reality, many borrowers review their mortgage when their initial fixed or tracker period ends.
So when I’m comparing products, I’m also interested in the cost during the period we’re realistically considering.
For example:
What will this mortgage cost over the next two years?
or:
What will it cost over the next five?
That’s often much more meaningful.
Should I Choose a Two-Year or Five-Year Fixed Mortgage?
There isn’t one correct answer.
This is something I discuss with clients regularly because it’s tempting to turn it into an interest-rate prediction.
Someone says:
“Rates will definitely be lower in two years, so I want a two-year fix.”
Maybe they will.
Maybe they won’t.
Nobody knows with certainty.
A two-year fixed mortgage means you’ll be able to review your mortgage sooner.
But it also means you’ll need to face the mortgage market again sooner.
There may be another product fee, valuation or other costs to consider.
And if rates are higher when the mortgage ends, your next deal could be more expensive.
A five-year fixed mortgage provides longer payment certainty.
But you may remain tied to that mortgage if rates fall significantly or your circumstances change.
Early Repayment Charges may also apply if you want to leave the mortgage before the fixed period ends.
So instead of asking:
“Which one will turn out cheapest?”
I’d ask:
How important is certainty to you?
Are you likely to move home?
Could your circumstances change?
How comfortable would you be if mortgage rates were higher in two years?
Those are questions we can actually answer.
What Are Early Repayment Charges?
An Early Repayment Charge, often shortened to ERC, is a charge that may apply if you repay or leave certain mortgages during a specified period.
This matters more than people sometimes realise.
Imagine you take a five-year fixed mortgage because it’s slightly cheaper.
Eighteen months later, you decide to move home.
You may potentially be able to port the mortgage to another property, subject to the lender’s criteria and a new assessment.
But porting isn’t always straightforward or guaranteed.
If you can’t port and need to repay the existing mortgage, an Early Repayment Charge could potentially cost thousands of pounds.
That’s why I want to understand future plans before recommending a mortgage.
The cheapest mortgage today can become very expensive if it doesn’t suit what happens tomorrow.
Is a Tracker Mortgage Better Than a Fixed Mortgage?
Again, there isn’t one universal answer.
A tracker mortgage usually moves in relation to another interest rate, commonly the Bank of England Base Rate.
If that underlying rate falls, your mortgage rate would normally fall accordingly.
If it rises, your mortgage rate would normally rise.
Some tracker mortgages can offer greater flexibility and may have low or no Early Repayment Charges.
But that varies by product.
A fixed mortgage gives you certainty over your interest rate during the fixed period.
Your payment isn’t normally affected by movements in the Bank of England Base Rate while you’re fixed.
There’s a trade-off.
Tracker:
More exposure to interest-rate movements.
Fixed:
More certainty, but potentially less flexibility.
Neither is automatically better.
Should I Wait for Mortgage Rates to Fall?
This is one of the most difficult questions because nobody knows exactly what rates will do.
You might wait six months and discover mortgage rates have fallen.
You might wait six months and discover they’ve increased.
If you’re buying your first home, house prices could also change during that period.
The property you wanted could sell.
Your personal circumstances could change.
For an existing homeowner, your current mortgage deal could expire while you’re waiting.
I wouldn’t base an important financial decision entirely on predicting where interest rates will be next year.
I’d rather ask whether the mortgage and monthly payment are comfortable based on the information available today.
What If I Secure a Rate and Rates Fall Before Completion?
This can depend on the lender and how far through the mortgage process you are.
In some circumstances, if a lender reduces its rates after you’ve applied, there may be an opportunity to move onto a cheaper product before completion.
But this isn’t universal.
Processes and eligibility vary between lenders.
This is one of the reasons I continue reviewing cases after the initial mortgage recommendation rather than assuming the job ended when the application was submitted.
Equally, if rates rise after you’ve secured a mortgage product, having already reserved it may prove valuable.
The important thing is that you shouldn’t assume either outcome is guaranteed.
Are the Best Mortgage Rates Only for People With Huge Deposits?
Not necessarily.
Lower loan-to-value mortgages can often access more competitive pricing.
But lenders compete across different parts of the market.
There are mortgages designed for buyers with 5%, 10%, 15% and larger deposits.
The relevant question isn’t:
“What’s the cheapest rate anywhere in the UK?”
It’s:
“What’s competitive at my loan-to-value?”
A first-time buyer with a 10% deposit shouldn’t feel that they’ve somehow failed because the headline rate they’ve seen online requires 40% equity.
They’re different mortgage markets.
Does My Credit Score Affect My Mortgage Rate?
Potentially.
But I wouldn’t obsess over the number shown by a consumer credit app.
Mortgage lenders don’t simply look at one universal credit score and assign an interest rate based on it.
They’ll consider information on your credit report alongside their own criteria and underwriting.
Previous missed payments, defaults, County Court Judgments or other adverse credit can affect which lenders and products are available.
That could mean the lowest mainstream mortgage rates aren’t available to you.
But adverse credit doesn’t necessarily mean you can’t obtain a mortgage.
The details matter.
Does My Income Affect the Rate I Can Get?
Not usually in the simple sense of:
“Higher salary equals lower rate.”
Income is primarily important when determining whether the mortgage is affordable and how much a lender may be prepared to lend.
However, if your income or circumstances mean you only qualify with certain lenders, that can indirectly affect the rates available.
This is why the cheapest mortgage in a comparison table is irrelevant if that lender won’t lend you enough money.
Eligibility comes before price.
What About Self-Employed Borrowers?
Being self-employed doesn’t automatically mean you’ll pay a higher mortgage rate.
The bigger issue is whether you meet the lender’s income and trading-history requirements.
Different lenders can assess self-employed income differently.
Some may look at particular years’ figures.
Some may take an average.
Some can consider retained profits or other income in certain circumstances.
So once again, the question isn’t necessarily:
“Who has the lowest rate?”
It’s:
“Which lenders understand and accept my income?”
Then we compare the appropriate mortgages within that group.
What Should Existing Homeowners Do When Their Deal Ends?
If your current fixed or tracker mortgage is approaching its end, there are normally two broad routes worth comparing.
Stay With Your Current Lender
Your lender may offer you a new mortgage product through a product transfer.
This can sometimes be relatively straightforward.
Depending on your circumstances and whether you’re changing the borrowing, there may be less underwriting than with moving to another lender.
Remortgage to Another Lender
Another lender may potentially offer:
- A lower rate.
- Lower overall cost.
- Different features.
- Greater flexibility.
- Different borrowing options.
But changing lender may also involve a new affordability assessment, property valuation and potentially other costs.
Neither option automatically wins.
I think both should be considered where appropriate.
Don’t Automatically Stay With Your Existing Lender
Convenience has value.
But convenience shouldn’t mean never checking the alternatives.
Equally, don’t automatically remortgage because another lender advertises a slightly lower rate.
Suppose your existing lender offers 4.7% with no product fee.
Another lender offers 4.5% with a £1,499 fee.
Which one is cheaper?
Again, it depends on the mortgage balance and how long you’re comparing them for.
A small difference in rate can look exciting until you translate it into actual pounds.
How I Compare Mortgage Rates for Clients
I don’t simply sort mortgages by interest rate and choose the first result.
I want to understand:
Eligibility
Will the lender actually accept your circumstances?
Affordability
Will they lend what you need without leaving you financially stretched?
Interest rate
What will the mortgage payment be?
Product fee
How much does obtaining that rate cost?
Overall cost
What is the likely cost during the initial mortgage period?
Early Repayment Charges
What would happen if your plans changed?
Incentives
Are there cashback, valuation or legal benefits?
Flexibility
Can you overpay? Are there restrictions?
Future plans
Are you likely to move, extend, change jobs or need additional borrowing?
That’s how I’d try to identify a suitable mortgage.
Not by finding the smallest number on the screen.
A Worked Example: Why the Lowest Rate Doesn’t Always Win
Let’s use a simplified hypothetical example.
You’re borrowing £150,000.
Mortgage A
Rate: 4.30%
Product fee: £1,999
Mortgage B
Rate: 4.55%
Product fee: £0
Mortgage A has the better rate.
But it costs £1,999 to obtain it.
The difference in interest on £150,000 between 4.30% and 4.55% is initially around £375 per year, before allowing for capital repayment and other factors.
Over a two-year period, that difference alone wouldn’t necessarily compensate for a £1,999 product fee.
Now change the mortgage balance substantially and the calculation changes.
That’s exactly why I can’t tell somebody:
“Always take the lowest rate.”
The maths depends on the mortgage.
First-Time Buyers: Don’t Build Your Budget Around the Maximum Mortgage
There’s another side to finding the “best” rate.
Imagine a lender says you can borrow £300,000.
That doesn’t automatically mean you should.
I’ve worked with clients who could theoretically borrow more than they actually wanted to spend.
They’d rather have:
- Money left each month.
- Emergency savings.
- Holidays.
- A social life.
- Financial breathing room.
I think that’s completely sensible.
The best mortgage isn’t the mortgage that stretches you to the largest house a lender will allow.
It’s a mortgage that fits comfortably alongside the rest of your life.
Frequently Asked Questions
What is the best mortgage rate in the UK?
There isn’t one rate that’s best for everybody. Mortgage rates vary according to loan-to-value, lender criteria, mortgage size, product type and individual circumstances. Rates also change frequently.
Is the lowest mortgage rate always the cheapest?
No. Product fees, cashback, valuation costs, legal incentives and other charges can mean a mortgage with a slightly higher interest rate costs less overall.
Is a two-year or five-year fixed mortgage better?
Neither is automatically better. Two-year fixes allow you to review your mortgage sooner, while five-year fixes provide longer payment certainty. Your plans, attitude to interest-rate risk, fees and Early Repayment Charges should all be considered.
Do bigger deposits get better mortgage rates?
Larger deposits can potentially provide access to lower loan-to-value bands and more competitive rates. However, it can also be sensible to retain some savings for emergencies and the costs of homeownership.
Should I pay a mortgage product fee?
That depends on the size of the fee, mortgage balance, interest rate and period you’re comparing. A fee-paying mortgage may be cheaper overall for some borrowers and more expensive for others.
Can I add the mortgage fee to my mortgage?
Some lenders allow this. However, adding the fee increases the mortgage balance and you may pay interest on that additional borrowing.
Should I wait for mortgage rates to fall?
Nobody can reliably predict exactly where mortgage rates will go. Waiting could result in a lower rate, but rates could also increase and your personal circumstances or property market conditions could change.
Can I change mortgage rates after I’ve applied?
Sometimes there may be opportunities to change products before completion if your lender launches a cheaper option, but this depends on the lender, product and stage of the application.
Should I remortgage or stay with my current lender?
Both options can be worth comparing. Your existing lender may offer a straightforward product transfer, while another lender may provide a more competitive overall mortgage. Costs and eligibility need to be considered.
So, What Are the Best Mortgage Rates?
The answer I’d give one of my own clients is:
The best mortgage rate is not necessarily the lowest mortgage rate.
What matters is what that rate comes attached to.
The fee.
The monthly payment.
The overall cost.
The Early Repayment Charges.
The flexibility.
The lender criteria.
And whether the mortgage actually fits your circumstances.
I’ve helped enough first-time buyers and homeowners to know that finding an attractive interest rate is the easy bit.
The real job is working out whether the mortgage sitting behind that rate is actually suitable.
So rather than asking:
“What’s the lowest mortgage rate?”
I’d ask:
“Which mortgage leaves me in the best overall position?”
That’s the question I think is worth answering.
If you’re buying your first home or your current mortgage deal is approaching its end and you’d like to understand the mortgage options available to you, you can book an appointment here:
https://veganmortgageadviser.co.uk/appointment
Your home may be repossessed if you do not keep up repayments on your mortgage.
Mortgage rates, fees and products can change at short notice. Mortgage availability and suitability depend on your individual circumstances, the property and lender criteria. This article provides general information only and does not constitute a personal recommendation.