Home house owners spend extra time researching an air fryer than a mortgage

We explain how to make sure you get the right mortgage

Updated: 10:29, 19 June 2024

Homebuyers and remortgagers spend more time choosing home appliances than digesting mortgage deals, a study claims, as homeowners report the fast-paced mortgage market is making them stressed.

A sixth of homeowners said they felt pressured into making a quick mortgage decision due to the rapidly changing market, according to research by Smart Money People, with 57 per cent reporting that they felt stressed as a result.

A quarter of buyers and remortgagers said the mortgage process had left them confused.

Balancing act: Homeowners need to weigh securing a deal while it lasts and ensuring that it is the right one for them

On average, homeowners spent less than half a day looking at mortgage options before diving into a deal, Smart Money People said – this is less time than they spend considering which coffee machine or air fryer to buy.

However, with the mortgage market moving at such a fast pace, many feel as though they have little choice but to commit to a deal as early as possible in order to avoid losing out.

On average, a mortgage deal remains on the market for 15 days. With around 6,000 products on the market, the most on offer for 16 years, selecting the right mortgage deal can prove difficult.

In fact, the overwhelming number of options may have contributed to a quarter of brokers reporting that their clients had lost out on deals because the market had moved so quickly.

David Hollingworth, This is Money’s mortgage expert and broker and L&C Mortgages, told This is Money: ‘The mortgage market has been moving at pace in the last few years as interest rates rose rapidly and uncertainty caused periods of extreme volatility.

‘That has meant that mortgage deals have at times been changing even if more quickly than they normally do.

‘Pricing will always fluctuate as funding costs and lender service will dictate changes to the lender deals but that can heap additional pressure on borrowers looking for the right deal for them.

‘There’s a balance to be had in ensuring that you don’t risk missing out on a better rate but also being sure that the deal will be the right product.’

We were excited about our first mortgage… now it feels like major pressure

Remortgaging: Polly Mallett has paid for an adviser to help her find the right deal

Polly Mallett, who is currently in the process of remortgaging her housing in Cambridgeshire, is concerned about missing out on a deal if the market moves.

Polly told This is Money: ‘We were quite excited when we got our first mortgage, whereas now it feels like it’s really big pressure.

‘It feels like we just want to get it done and find a deal that we’re pleased with.

‘You almost feel like you’ve just got to do it as quickly as you can so that you don’t miss it, and it just feels it feels totally different this time.

‘Whereas before we were really excited this time, we are just really stressed.’

While Polly is keen secure a deal as soon as possible, she decided to pay for a mortgage adviser to ensure that the decision she makes is the right one.

‘We just thought that was the right way to do it,’ she said, ‘because, to be honest, we just don’t really have a clue how to do it ourselves, and what everything means.

‘It’s someone that can explain everything to you. I think there’s so many aspects of it we don’t fully understand. So being able to ask all our questions to someone that’s impartial has been really helpful because they can give us a really honest answer on what we’re worried about.’

She added: ‘It’s just the fear that if you hold on, is that deal still going to be there? Is it going to increase? And I think things just feel really uncertain.’

Hiten Ganatra, managing director of Visionary Finance, agrees, noting that brokers can help to alleviate stress for homeowners as well as find them the best deal.

He said: ‘The pace of change in the UK mortgage market is unrelenting with multiple lenders changing their criteria and rates every day, so as mortgage brokers we have to ensure we are on top of these changes to offer the best possible products to our customers.

Even though 58 per cent of homeowners choose to go to a broker, however, a majority said they still found the experience stressful.

Jacqueline Dewey, chief executive of Smart Money People, said: ‘It’s really important to put time aside to review options carefully, ensure you can afford the repayments and any fees, plus are happy with the customer care you receive.’

She added: ‘Locking in a mortgage deal is an important decision and will often be one of the biggest financial choices people make.

‘The current pace of the mortgage market means that both first-time buyers and remortgagers are feeling pressured to make decisions quickly, which is leading to high levels of stress. This is putting strain on brokers’ relationships too.’

Money Checklist: First-time buyer tips

Picking right mortgage deal

David Hollingworth says an adviser can help to find you a mortgage deal that is right for you

Fixed or variable?

‘The first thing to do is to work out what kind of mortgage deal will offer the features that will work for your situation.

‘Think initially about whether you prioritise knowing what you will pay for a certain period of time or if you are happy with payments to fluctuate, perhaps in the hope that interest rates will come down,’ David Hollingworth said.

Of course, choosing a fixed rate mortgage means that if the Bank of England base rate falls, then you will not benefit from a drop in rates.

On the other hand, in uncertain times a fixed rate can help you to make sure that you can afford to pay each month.

He said: ‘If security is important a fixed rate is likely to be the right option for you.

‘This will mean that you know what rate you will pay for a specified period and remove any worry over any changes in base rate during that period.

‘If you’re hopeful that rates could drop and payments fall as a result then a tracker or discounted deal could be an option but ensure that you consider how well you would cope if rates don’t fall or even rise further.’

Two years or five years?

Choosing between a two year deal and a five year deal will largely depend on your situation, both financially and in life.

A two your mortgage could be ideal if you think you might move house, but moving between short mortgages means that you will end up paying far more in fees over time.

‘Once you know what kind of rate you want then you can think about the deal period that should suit. Many deals will tie the borrower in with early repayment charges (ERC) during the deal period.

‘Therefore, if there are possible changes ahead when you may want to have the ability to shop around the market you may prefer to lock in for a corresponding period,’ Hollingworth said.

‘For example, if moving in a couple of years you may prefer to take a two year deal rather than be locked in for five years or more.

‘You can take most deals to a new property but there’s no guarantee the lender will be able to offer any top up borrowing or at what rate so having the flexibility to shop around may be preferable.’

The fees involved

When looking for a mortgage, it is worth considering that you will have to pay an arrangement fee to the mortgage provider.

‘This is something you should include as part of the full cost of the mortgage deal, and could set you back well over over £1,000.

Don’t get caught out by a mortgage deal with low rates but sky-high fees. Some lenders will do this to make their offer more attractive, but hit you with fees over £2,000.

Is a broker worth it?

Unless you are well-versed in the world of mortgages, navigating the mass of deals available can be a daunting prospect. Finding a broker can help to not only find you a deal that suits you, but also ensure that you understand the jargon, and reduce the stress you face.

‘Taking advice will help you with both aspects, as an adviser will not only be able to help you understand the best type of product for your circumstances but pinpoint the best available,’ Hollingworth said.

‘That will include taking account of the rate on offer but also factoring in any associated fees that could apply.’

Some of the lowest rates can carry big fees which could mean it’s not the best value.

They will also be able to keep you posted on any potential withdrawal deadlines or find the next best alternative if a deal does get pulled. That should give you a better chance of being able to secure a rate before it disappears, as well as ensuring you get the best value.

This is Money mortgage advice partner L&C can help you understand how much you can borrow and find the right deal for you, it offers fee-free advice.

> Find the right mortgage for you with This is Money’s partner L&C

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