Rates are overrated

Looking at the rate alone doesn’t tell you everything you need to know. We want to make sure you find the right deal every time - and that means looking beyond the headline rate.

The research for our Mortgage Saver Review showed that rates don’t give borrowers the full picture

Mortgage deals are almost always presented with a focus on the headline interest rate. The research for our Mortgage Saver Review showed that these headline rates rarely indicate how competitive the deal actually is compared to others. Borrowers are drawn in by mortgage ‘best buys’, but in reality, a higher rate could work out as a better deal when extra costs like fees are added in.

So what is true cost?

The true cost of a deal takes all costs associated with the mortgage into account. Comparing deals by true cost gives a complete overview of how much you’ll pay for the deal, factoring in fees and cashback to the repayment cost.

Why is it important to look at true cost?

Interest rates are currently low, so the difference between a rate of 1.2% and a rate of 1.89% often doesn’t outweigh the difference between fees of £1,000 and no fees. The lower rate may look more appealing on first glance, but after factoring in the cost of fees, the higher rate often works out cheaper overall.

How can you find the right deal?

Make sure you don’t get drawn in by low rates and remember to compare deals by true cost. Lots of the ‘best buys’ are designed to do exactly that, but the hefty fees on top could mean you miss out on a higher rate - but overall cheaper deal.