It is no secret that the housing market in Cumbria is a busy place at the moment. There is huge interest in properties as they come onto the market, sales are happening quickly and prices are high.
Earlier this month The Cumberland announced its lowest ever mortgage rates, offering Cumbrians the chance to make significant savings in this highly competitive market. It has announced reductions for fixed rate and discounted mortgages that will see it offer a rate of 0.83 per cent.
The rate is available on a two-year variable discounted mortgage with a loan to value of 60 per cent - a rate reduction of 0.25 per cent. It also has a 0.88 per cent rate available for a two-year fixed mortgage with the same loan to value.
However, as Carlisle mortgage manager Jack Green explains, there are a number of factors to consider when deciding which mortgage is best for you.
“As the names suggest fixed rate mortgages offer a predictable rate of interest, while variable rates can change depending on a number of factors,” says Jack.
“The biggest consideration for people who choose to take on a fixed rate mortgage is probably peace of mind. It is easier to budget and you know in advance what your outgoings are going to be every month.”
However, Jack says in return for being more predictable fixed rate mortgages tend to be slightly more expensive.
"So for example, a two-year fixed rate is normally more expensive - ie. it's at a higher rate and higher payment - than a two-year variable rate would be.
"Variable rate mortgages are generally a little bit cheaper and if rates come down your mortgage payment will come down, but on the other hand if rates do go back up your mortgage payment might go up as well.”
Jack says the key thing is to get good advice on the best mortgage for you so you are ready to move quickly when you want to buy a home.
“Speed is of the essence in the housing market at present, so it’s vital to have your mortgage agreed in principle,” says Jack. "That's where The Cumberland comes in. We can guide you through all the different options and find out what’s important to you. Then we’ll recommend the best mortgage based on your circumstances.”
One person who purchased a property after getting mortgage advice from The Cumberland was Jemima, an interior designer who was able to buy her first flat after talking with mortgage adviser Kirsty Forrester.
Jemima said: “The service was really good. What I liked was that it wasn't just mortgage chat. She would ask me more personal stuff, like we talked about IKEA and gardening. It wasn't all business, there was a nice personal angle to it as well."
Rates are only one consideration when it comes to choosing the best mortgage for you.
"The general rule is the bigger the deposit you put down the lower your interest rate," says Jack. "And, generally, the bigger the fee you pay up front the lower the interest rate.”
However, depending on the value of the home you want to buy and your personal circumstances simply seeking out the lowest rate may not be the best option overall.
“If you go online and look up the cheapest rate it might not actually be the cheapest overall because it could have a big fee attached,” says Jack. “It's about weighing up the total cost or the product, rather than just always that cheapest rate.”
Fixed rate mortgage - A mortgage where the interest rate stays the same for the duration of the fixed rate period
Variable rate mortgage - A mortgage where the interest rate varies depending on changes to a benchmark rate of interest
Tracker mortgage - A tracker mortgage is a type of variable rate mortgage which "tracks" a base rate – usually the Bank of England's base rate
Base rate - The base rate of interest is set by the Bank of England and is the amount it charges banks and lenders for borrowing money
Discount mortgage - A mortgage where the interest rate is pegged at a certain amount below the lender’s standard variable rate