How to get cheap mortgage rates
Whether someone is a first-time buyer or looking to remortgage, finding a cheap mortgage rate can feel like a bit of a minefield. But even a small difference in interest rate can save thousands over the life of a mortgage. This guide breaks down what affects mortgage rates, which types of mortgage tend to be cheapest, and how buyers can give themselves the best chance of securing a great deal.
Key takeaways
- LTV matters: The lowest rates (currently 4.03) are typically reserved for those with a 40% deposit (60% LTV).
- Credit health: Your credit score and recent credit applications directly impact the interest rate lenders offer you.
- Fixed vs. variable: Fixed rates offer payment stability, while variable rates fluctuate with market changes.
- Broker advantage: Mortgage brokers can access over 20,000 products, including exclusive deals not available directly to consumers.
- Affordability schemes: Options like Income Boosts or Shared Ownership can help if you have a smaller deposit or lower income.
What is the lowest mortgage rate offered today?
Mortgage rates change regularly, but as a general guide, the cheapest rates tend to be available to borrowers with larger deposits (lower LTV) and strong credit profiles. For the latest rates available from over 100 lenders, it's worth checking Tembo's mortgage rate comparison tool.
A few key things to keep in mind:
- Lower LTV = lower rates: Borrowers with a 40%+ deposit (60% LTV) will generally access the cheapest deals.
- Term length matters: Shorter fixed terms (e.g. 2-year fixes) sometimes offer lower headline rates, but longer fixes (e.g. 5-year) provide more certainty.
- Credit score counts: A clean credit history can unlock better rates from lenders.
The rate a borrower is offered will depend on their individual circumstances, so it's always worth getting a personalised quote.
See what rates you could access?
Speak to a Tembo mortgage expert to compare over 20,000 products from more than 100 lenders and find the best deal for your situation.
What factors affect the mortgage rate you're offered?
Generally, fixed-rate mortgages with a low LTV (Loan to Value) tend to offer the lowest rates. But the 'cheapest' mortgage type depends on a borrower's circumstances and how much risk they're comfortable with.
Here's a quick comparison:
- Fixed-rate mortgages lock in the interest rate for a set period (typically 2 or 5 years), giving borrowers certainty over their monthly payments. They're a popular choice for anyone who wants to budget with confidence.
- Variable-rate mortgages move up or down in line with the market. If rates fall, monthly payments drop too but the reverse is also true, and there's no guarantee of what rates will do in the future.
How to improve the rate on offer
Beyond choosing the right mortgage type, there are a few things borrowers can do to access better rates:
- Put down a bigger deposit: A larger deposit means a lower LTV, which usually unlocks cheaper deals.
- Check and improve credit scores: Paying off outstanding debts, avoiding new credit applications in the months before applying, and checking for errors on a credit report can all help. Read more about credit scores here.
- Use a mortgage broker: Brokers can check eligibility against a wide range of products including deals that aren't available directly to consumers. At Tembo, we have access to over 20,000 mortgage products from more than 100 lenders.
Nobody has to settle for the first mortgage offer they receive. Shopping around or better yet, letting a broker do it can make a real difference.
Ready to find your best rate?
Complete your mortgage options and book a free call with Tembo and we'll search the whole market to find the cheapest mortgage for your circumstances.
You might also like: What are mortgage interest rates and how do they work?
Are there other ways to make mortgages more affordable?
There are plenty of budget-boosting options out there, whether someone is a first-time buyer, a home mover, or looking to remortgage.
Family-support options: If you have family members who are willing and able to help, these schemes can significantly boost affordability:
- Income Boost - a family member adds their income to the mortgage application to increase borrowing power.
- Deposit Boost - a loved one gifts or lends money towards the deposit.
- Savings as Security mortgage - a family member uses their savings as additional security for the mortgage.
Other options if family support isn't available: Don't worry if loved ones aren't able to help, there are other routes too:
- Shared ownership - buy a share of a property and pay rent on the rest.
- Government schemes and home developer discounts.
There are lots of alternative ways to buy a house or remortgage and a good mortgage broker can help buyers figure out which option suits them best.
Not sure which option is right for you?
Get in touch with Tembo and we'll help you explore all the ways to make your mortgage more affordable, from family support schemes to government initiatives.
