Is now the best time ever to get a mortgage?

There’s never been a better time to get a mortgage, but make sure you factor in ALL the costs before picking a deal.

Research from MoneySuperMarket reveals that if you borrowed £150,000 at the best 5-year fixed rate available today, you’d pay nearly £12,500 less than if you’d signed up to the best deal back in 2008, when rates were at their peak during the credit crunch.

Here’s why now’s a great time to buy your home or remortgage your property…

Lowest ever rates

The current best 2-year fixed rate deal is from Yorkshire Building Society at 1.18%, with an arrangement fee of £1,499.

You can only get this mortgage if you’ve got a deposit of 35% of the property value, or the equivalent amount of equity if remortgaging.

Monthly payments at this rate would cost £578, so the cost over the two-term of this deal is £15,371.

If you’d taken out the best two-year fix in 2008, when the leading mortgage rate on offer was from Abbey at 4.79% and came with fees of £995, you’d have paid a total of £21,611 over the two-year term (although this deal required a 25% deposit).

Getting your mortgage today rather than in 2008 would therefore save you £6,240 over the two-year term.

Better than last year

You’d still be nearly £1,500 better off with this new Yorkshire deal than if you’d taken out the best 2-year fixed rate this time last year.

In 2014, the best rate available was from West Bromwich Building Society at 1.48%.

This deal had a hefty £2,499 fee and was only available if you had a 40% deposit (or the same amount of equity if remortgaging).

Monthly payments at this rate cost £598, and the total cost over the 2-year term is £16,851, so £1,480 more than the cost of the Yorkshire deal.

All-time low rates

Dan Plant, consumer expert at MoneySuperMarket said: “The current mortgage climate is the hottest it’s been for some years, with rates at an all-time low. When comparing mortgages it’s vital to work out the total cost over the term of the deal, taking both rates and fees into account.

“The best option for you will depend on how much you want to borrow – a good rule of thumb is, the larger your mortgage, the more likely it will be worth paying a big fee. But always work out the exact figures for your circumstances before taking the plunge.”

Longer term fixes

If you’re looking for a longer-term fixed rate, you’ll still make big savings compared to taking out a mortgage in 2008.

Today, the best 5-year deal is at 2.19% from Yorkshire Building Society, with a booking and arrangement fee of £1,675. You need a 40% deposit to qualify for this deal.

If you borrowed £150,000, you’d pay back £40,675 over five years.

Back in 2008, the best 5-year fixed rate was from Cheltenham & Gloucester, at 4.89%, with a £1,094 arrangement fee. You needed a 40% deposit to qualify for this deal.

The total cost you’d have to repay over five years amounted to £53,114 – that’s £12,439 more than you’d pay with today’s best offer.

A helping hand

It’s not only low mortgage rates that are on your side if you’re looking to get on the property ladder or remortgage.

Stamp duty reforms and the new Help to Buy ISA announced in the Budget are all aimed at helping you boost your deposit if you’re a first-time buyer.

The more you can save, the better the mortgage rates you’ll be able to qualify for, but there are still some great deals if you don’t have a big deposit.

The Post Office, for example, has just launched a market-leading 2-year fixed rate at 1.83% if you’ve got a 20% deposit to put down. This deal has a £995 arrangement fee.

If you’ve only got a 15% deposit, then the Post Office offers a best buy 2-year fixed rate of 2.19%, again with a £995 fee.

It’s also offering a Help to Buy mortgage at 3.98% fixed for two years if you’ve only got a 5% deposit, with no arrangement fee.

Find out more

You can check out the top mortgages whatever your needs and preferences on our mortgage channel.

Please note:
any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

Did you enjoy that? Why not share this article


Other articles you might like

Popular guides