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Should you get your mortgage from your bank?

Your bank already knows your circumstances and can get an idea of your reliability with less effort when it comes to assessing your mortgage application.

Your bank might also be able to tailor a mortgage product to better suit you, but you should always shop around first.

Compare first time buyer mortgages

Compare a huge range of first time buyer mortgages on our comparison tables

First time buyer mortgages

Getting a mortgage from your bank might seem like an easier option, and there are certainly some benefits to doing so, but there are likely to be better options out there if you keep searching.

A mortgage is a huge, long term commitment, and there are thousands of deals available on the market. It is a competitive industry and many banks and other mortgage providers are determined to get your business, especially if it comes at the expense of their rivals.

Use comparison websites like uSwitch and consider using a mortgage broker to help you find the right deal – check what your bank has to offer too, but don’t be rushed into going with them simply because it’s easier.

What are the advantages of getting a mortgage from your bank?

There are a two main advantages to getting a mortgage from your bank:

  • They may be a simpler application process
  • Possible perks with linking your current account or savings account to the mortgage

The application process is likely to be simpler, purely because you receive your salary and other income into your bank account. Your bank should be able to process the paperwork without you needing to gather all this information yourself to show to another lender.

However, your bank will still be strict about approving your application – they’re just more likely to let you know in advance what your chances are. It’s worth bearing in mind that this means it may also be harder to “hide” your spending from your bank (which is also considered in addition to income).

Some banks may also give you some kind of perk as they can link your bank account to the mortgage, which makes it easier to take payments each month. You might be able to get cashback, or a discount on some of the fees, for example.

You could also get an offset mortgage, which allows you to link your savings to your mortgage so you can overpay on your mortgage using your savings, which could potentially give you more in savings than you would get from your savings interest.

Who provides mortgages?

It isn’t just banks that provide mortgages. Check in with a wide range of lenders to see what your options are.

High street banks

These are the most common type of mortgage lenders. The likes of Santander, HSBC, Natwest, RBC and Barclays will offer current accounts as well as mortgages, so if you are customer with one of them you may find it less hassle to get a mortgage with them, but there’s no guarantee your application is more likely to be approved.

Building societies

Although many building societies have a big presence on the high street, they are owned by its members rather than shareholders. They still are driven by making a profit, but they can usually afford to offer cheaper mortgages.

Many building societies only operate in certain regions, but definitely look up your nearest one to see if you can get a good deal. Some of the most popular building societies are Nationwide, Yorkshire, Skipton, Coventry and Leeds.

Specialist mortgage lenders

There are many lenders who specialise in only one or two types of mortgage customer. For example, some mortgage lenders will only lend to people who are self-employed or work freelance. Meanwhile, some will specialise in helping those who don’t have a good credit rating, or those in need of financial assistance from friends and family.

Even if you think your circumstances are not suited to getting a mortgage, keep comparing until you know exactly what’s available to you. High street lenders are looking for the most common type of mortgage customer, but there are many lenders specialising in all kinds of circumstances.

Credit unions

Many credit unions are now offering mortgages, savings and other credit products that rival many of the leading lenders. They can also be more flexible on skipping mortgage repayments if you are in financial trouble and are more likely to lend to those who have bad credit.

You usually need to have been a member of a credit union and opened a savings account for at least a few months. They are usually aimed at the local area too so you might only be accepted if you live or work in the neighbourhood already.

How to compare mortgages

The interest rate is the most important factor when comparing mortgages. Our mortgage tables allow you to compare between the various products, but always look at the APRC to help guide you on how much it will cost you.

Nearly all mortgages will begin with a featured or special limited time rate.

These interest rates are much lower than the ‘Standard Variable Rate’ (the SVR is the rate the lender usually charges for their mortgage, at the time of comparison – it is subject to change) and usually last for two or five years. After that period the SVR then kicks in, so you will also need to compare this too.

You can compare mortgages based on the special offer fixed or variable interest rate, but these are temporary. Mortgages can last up to 25 years, or even longer, so you need to factor in the long term costs, not just how much you might save over a two or five year period.

Compare first time buyer mortgages

Compare a huge range of first time buyer mortgages on our comparison tables

First time buyer mortgages

What does a ‘good’ mortgage look like?

There is no rule to what a good mortgage looks like. The mortgage market is regulated to ensure a certain degree of fairness, but that doesn’t mean all mortgages are equal or that they all work for each individual’s circumstances.

Consider first how much you can afford to spend on repayments every month, and how much flexibility you might need down the line to remortgage or overpay. Check the terms and conditions to see what they will allow and what the fees are for breaking those rules.

Ultimately, you want a low rate and a low cost option to remortgage if that rate suddenly rises. Some mortgages will waive the admin fees, but at the cost of a higher interest rate, so also calculate what the benefits and drawbacks are of going with a lender who charges you the full amount.

Be ready to apply for a mortgage

Once you have your deposit and your sights set on a property within your budget, get your payslips and legal identification ready.

Mortgage lenders are now required to make extra checks on your reliability and suitability to the product you are applying for. This involves checking how much credit you currently have to your name and how much debt you currently owe.

They will also check how much you spend on everyday items such as food and clothes, as well as what regular outgoings you have like a gym membership or a Netflix subscription.

Make a budget and see if you can cut down any of that spending and reduce any debts you currently have. This will improve your chances of being approved for a mortgage.

It is also worth taking a look at your credit report and seeing what you can immediately do to improve your current credit score. The higher your score, the better your chances are of being approved for the mortgage.

Should you use a broker to find a mortgage?

A mortgage broker is similar to an online comparison service, but they will also give you advice. That advice is regulated by the Financial Conduct Authority, so if you make a significant loss on your mortgage as a result of that advice, the broker could be made to pay.

This, in theory, ensures that you get good advice. Mortgage brokers do not always show every deal on the market, and may only point you to the ones that pay them commission. But these brokers are less likely to charge you any money for their advice.

Most other mortgage brokers charge a fee for their services. It is worth considering, and it is certainly a good idea to expand your options rather than simply going to your bank.

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