To make a success of getting the mortgage you really want it's important to develop the same attitude as the lenders and brokers themselves. In particular, it's vital that you think of mortgages as 'products' – items that are bought and sold, just like carrots or charcoal.
Seems odd, I know, but that's exactly how banks, lending houses and, increasingly, building societies think of mortgages – packages of money that are bought and sold.
Today, a lender 'buys' blocks of money in the market at the best price that it can – that is, borrows at the lowest possible rate over base that it can – then 'sells' that money to customers – lends it out – at the highest possible rate that it can achieve. The difference is the profit that the lender makes.
As a happy shopper hardened in the white heat of the consumerist 21st century, your job is to buy at the best price you can. That means finding out who's offering what and when.
The When Is Usually As Important As The Who
Fixed rate mortgages are usually only available for relatively short periods of time because they relate to particular 'packets' of money negotiated by the lenders. Once the full amount is used up, another 'packet' has to be negotiated, usually at a different rate to that which was on offer before.
A bit like buying potatoes really. When there are plenty around, prices are low, but at times of scarcity, prices rise. Often the best quality potatoes are in short supply; other times it's a good year and you can buy as many as you like. If you're a careful customer and know what to look for, you can pick the best out of a poor bag. If you don't know, or don't care, you can end up buying a bag riddled with rot.
It's easy to pick up a relatively 'poor buy' mortgage because lenders are keen to sell them at the high profit margins that they make, but the best buys usually take some looking for and when they come up you have to 'buy' quick.
To buy clever you'll need as much information as possible. Individual lending rates vary daily, sometimes hourly, and with the hundreds of possible lenders available the task can seem daunting. The world direction on interest rates has historically been given by the US Federal Reserve, which meets every one to two months to decide the base rate. A calendar of past, and future, Fed meetings can be found at various web sites – one of the most useful is operated by the Federal Reserve Bank of Minneapolis.
The rate you'll be offered on a mortgage will always be so much up from the base rate, according to the lender's perceived risk on your account (which, as they're always fully secured to well over 100%, is usually zero for all intents and purposes anyway). Negotiate hard on rate as it's been a 'buyers' market for some time now. If you think of yourself as a good 'risk' then negotiate very hard, and never take the first offer.
Shop around with as much care as you would for a new pair of shoes – mortgages don't necessarily look good, but getting the one you really want will release the kind of money you need to buy the things that do.
