Best mortgage rate doesn’t always mean cheapest deal, warns Moneysupermarket

11 March 2009 / by Rachel Mason
A competitive mortgage rate won't always mean a cheap mortgage deal, warns

The comparison site is warning mortgage customers not to get sucked in by a good rate, because there are other things to consider when shopping around for the best mortgage deals.

"When comparing, there are three key things you need to find out – the rate, the fee and the amount that will be left owing on the mortgage," says Louise Cuming, head of mortgages at

Ms Cuming says that while a poster in a bank window showing a rate of 3.5 per cent may look good, depending on the fees involved and the size of the mortgage, customers could potentially be better off going for a mortgage of up to 4.5 per cent.

"For example, on a two-year mortgage, you need to know how much you will have paid by the end of the two years (including paying the fee) and how much will remain outstanding on the mortgage," she said.

"People will often forget to take into account how much remains on the mortgage - and will simply look at the monthly repayments and the fee when comparing - or worse still, only look at the monthly cost."

According to, on a typical £100,000 capital and interest mortgage over two years, a rate of 4.5 per cent with no fee, will work out similar to a four per cent mortgage with a £1,000 fee, or a 3.5 per cent rate with a £2,000 fee.

"It is a mortgage minefield at the moment, with rates and fees differing wildly and, of course, the amount people owe varying greatly too," said Ms Cuming.

She continued, "borrowers must dig a lot deeper than the headline grabbing rate when comparing mortgages. On the face of it, a low interest rate might seem like a gift from the gods, but it won't necessarily mean you are saving money."

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