Published 24 June 2019 · Last reviewed 24 June 2019 · Older article — see current rates

Compare mortgages by “Total Cost” for an accurate appraisal

What is the best way to compare mortgages?

There are two main methods of comparing mortgages:

• Initial Interest Rate
• Total cost

In this article I’ll explain them. Just so you know at Niche Advice our default choice is “Total Cost” but every client has different needs so it’s advisable to talk this through with your Mortgage Advisor.

Initial Interest Rate

The method does NOT factor in the set up costs associated with the mortgage so it is a fairly blunt measure.

Total Cost

This method factors in the interest rates but also includes the set up costs too. There are a variety of fixed costs or incentives that may be applied to a mortgage:

• Completion Fee
• Application Fee
• Higher Lending Charge
• Valuation Fee (including incentive for valuation refunds or free valuation)
• CHAPS Fee
• Cashback

There are also variable incentives for which “Total Cost” method will apply a set assumption on:

• Free legal service

There may are also charges for redeeming the mortgages:

• Early repayment charge
• Deeds Release Fee
• Mortgage Discharge Fee

“Total Cost” analysis is normally completed over the benefit period. For example, if the product is a 5 year fix analysis would be made over 60 months. In can also calculate the interest charges on fees added onto the mortgage, for instance a Completion Fee added when the mortgage goes through.