Compare Offset Mortgage Rates | How to Make a Real Rate Comparison

When potential homeowners are looking around for an offset mortgage, one of the first things they need to do is compare offset mortgage rates. But it can be difficult to compare offset mortgage rates because of the different figures that borrowers are given. However, this is a key part of determining what you will have to repay. The trick is to not be swayed by what looks like a great rate – there are numerous things you need to question before you can decide whether this is the rate for you. It takes time, and it takes know-how but if you do the leg work, it will always pay off in the end.

Tracker Offset Mortgage Deals

When you compare offset mortgage rates for tracker mortgages, the first thing to look for is the amount by which it tracks the Bank of England base rate. This means it will be above (or in some cases below) the base rate by a certain percentage. The current Bank of England base rate as at May 2009 is just 0.5%, so when you compare offset mortgage rates, a rate that tracks the base rate by, for example +0.9%, you get an interest rate of 1.4%. However, if the base rate goes up, so does the mortgage interest rate, and if it goes down, so does the mortgage interest rate. This is why it is known as a tracker mortgage.

It is also worth looking out for tracker deals that are based on the bank's standard variable rate when it's time to compare offset mortgage rates. Like the example above, a tracker based on the bank's standard variable rate will be a certain percentage above or below it. This can be for a set period or for the life of the mortgage. When you compare offset mortgage rates, this type of mortgage is known as a lifetime tracker.

Fixed Rate Offset Mortgages

Fixed rates seem much easier to cope with when you compare offset mortgage rates. A fixed rate is what it says, so a rate of, for example, 5.65% is exactly that, isn't it? Well, it may be, but fixed rates are usually only fixed for a period, so when you compare offset mortgage rates, look out for what happens at the end of the fixed rate period. The rate may revert to the lenders standard variable rate, for example. If you plan to compare offset mortgage rates it's worth noting that long term fixed rate deals are becoming available, with several offset mortgage providers offering fixed rates of ten years or longer.

The other thing to look out for, when you compare offset mortgage rates is combinations of the rates listed above. For example, when you compare offset mortgage rates you may see an offset mortgage deal, which offers a fixed rate period, then moves to a tracker rate, or a fixed rate period that reverts to the standard variable rate. This is when it becomes difficult to compare offset mortgage rates.

Looking At The APR

When you're ready to compare offset mortgage rates, you should look at the figure that says overall cost for comparison. This is an annual percentage rate, similar to the one on your credit card statement. It usually differs from the initial rate because it includes important factors such as: the interest rate you must pay; how you repay the loan; the length of the loan agreement; frequency and timing of instalment payments; and amount of each payment and certain fees associated with the loan. This is worth paying attention to when you compare offset mortgage rates, as what looks like a good initial deal might cost you more than you bargained for over the mortgage term.

It can be difficult to compare offset mortgage rates, but there's an easy solution if it seems too confusing. Just talk to a professional offset mortgage advisors and let them compare offset mortgage rates for you.

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