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How to Compare Remortgage Deals Side by Side

Aug 18, 2007
When it comes time to compare mortgage and remortgage terms, the piece of advice you'll hear most often is to be sure to compare like loans side by side. After all, they'll tell you, you can't expect to compare apples to oranges and come up with a comparison that makes sense. When it comes to remortgage deals, though, part of the comparison process is deciding which TYPE of remortgage is the best one for you. The most common comparison point - the APR - isn't always the best or only way to choose which remortgage deal is right for you. So exactly how DO you compare mortgage details to be sure you're getting the best deal?

There are two ways to compare mortgage deals to decide which is the better financial deal for you right now - by total cost and by monthly payment. Which method you use depends on your purpose for seeking a remortgage in the first place. If your main aim is to lower the monthly payment you're paying, you'll want to compare mortgage payments per month first, and the total cost of the remortgage second. If your aim is to shorten the time you're paying or to lower the total cost of your loan, then you'll compare mortgage total costs first, and then the other details.

Compare Mortgage Total Cost vs. Compare Mortgage Payments
How do you decide between the total cost and mortgage payments? Imagine your mate at work loaned you 20 quid and said you could pay him back at either
1GBP a day for the next month or 5GBP a day for the next five days - and any day you don't come up with the cash, he'll punch you in the nose. In the first case, you'll pay him back 30GBP for 20GBP, but who can't scrape together a quid a day? If you choose the second, you'll pay him back only 5GBP above what you borrowed, but it's a bit stiffer to come up with 5GBP each day. The better deal depends entirely on whether or not you can manage a higher payment each day.

Doing the Math
In either case, you'll want to compare mortgage costs, and when you do it's important to add in all of the costs to remortgage. That includes the total interest paid, any fees and closing costs you're charged and any redemption penalty you'll have to pay on your old mortgage. Don't forget to factor in special incentives when you compare mortgage terms side by side.

With the current financial climate, it's not difficult to find lenders willing to reduce their fees, or even charge you none at all. Other lenders may offer you little perks like letting you finance their fees along with the loan - you'll still pay the fees, and pay interest on them to boot, but it may make it possible for you to take a loan that you couldn't otherwise. In the end, it's important when you compare mortgage terms side by side that you include all the terms on each mortgage so that you can evaluate the best mortgage for your needs.
About the Author
Jon Francis has worked within the UK financial sector for more than 15 years. He's had over 100 articles published, recognised for his use of plain English to demystify the financial jargon usually associated with secured loans UK companies offer. If you want a 'plain English' guide to 3 easy steps to compare over 200 loan plans for home owners, in minutes visit "www.advancestart.com"
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