The best mortgage deals on the market

Are you better off getting your mortgage on the high street or through a mortgage broker? Christina Jordan compares the different deals on offer, both direct and from brokers.

The mortgage market is fragmented

To kick off my hunt for the cheapest mortgage, I looked at deals across a range of categories to see if the best buys were available direct or through brokers. I also asked a range of advisers to let me know their best available deals

Some lenders have one range available to both consumers directly and through intermediaries, while others have different deals for each channel. Some lenders only offer deals direct to consumers, like HSBC, while others only offer deals through brokers, like Platform (part of Britannia).

Two-year fixed rate mortgages

The two-year fixed rate market is always a fiercely competitive category among lenders, and in recent weeks we have seen rates chopped. The best two-year products I could find today were Principality Building Society's two-year fix at 3.44% available up to 65% loan-to-value (LTV) and Yorkshire Building Society's 3.29% deal up to 60% LTV with a high £1,195 fee. Both are direct to consumer only.

However, a broker pointed me in the direction of Alliance & Leicester's broker-only range. It includes a market-beating two-year fix at just 3.15%, available up to 70% LTV, completely trumping the rates on offer on the high street. But it does come with a hefty 2% fee, so it's only an overall best buy for some borrowers.

At 75% LTV, Coventry Building Society's 3.55% two-year fix (£999 fee) is hard to beat and is available via brokers and direct.

The best two-year fixed rate up to 90% LTV is HSBC's 5.99% with a low fee of £599 -- direct only. But if you fancy a longer deal this can be pipped by Saffron Building Society's three-year fix, at 5.89%, up to 90% LTV with a fee of £995 -- available directly and through brokers.

Five-year fixed rate mortgages

If you want to fix for five years the direct-only lenders look pretty competitive on an initial search.

HSBC's five-year fixed rate up to 60% LTV at 4.73% is the leading rate and comes with a fee of £999. This is direct-only. However, Alliance & Leicester's broker-only deal at 4.94% is only slightly higher, but available up to 70% LTV. But it has that sting in the tail again with the 2% fee -- ouch!

Up to 65%, Coventry's 4.99% five-year fix (£999 fee) is a best buy, and can be accessed directly and through brokers.

Up to 75%, Leeds Building Society's direct-only five-year fix of 4.75% with a £999 fee is attractive, but you need to take out the lender's home insurance cover to get this rate, which otherwise shoots up to 4.99%. At 85% LTV the rate goes to a best buy 5.5% (or 5.74% without the insurance discount).

If you have a 20% deposit the Post Office's direct-only five-year fixed at 5.25% with a £599 is hard to beat.

One product worth noting is Santander's four-year fix at 4.84% with a fee of £995 up to 70% LTV. This is available through brokers and consumers and, although not directly comparable with the five-year deals, it's an attractive product in anyone's book.

What about mortgage trackers?

When it comes to two-year tracker rates the direct-only providers compete really hard. However...

The cheapest rate available is through the broker channel, at 1.89% (Base+1.39) from Alliance & Leicester's broker-only range up to 70% LTV, but it features that nasty 2% fee again (which will suit some borrowers).

Probably the best all-rounder at 70% LTV is Santander's direct-only two-year tracker at 2.59% (Base +2.09) with a £995 fee.

But the following two-year trackers are also extremely competitive:

And below are some of the best lifetime trackers at a range of LTV ratios -- half of them are available via a broker:

Brokers know best

So what's the conclusion? On the surface, it doesn't seem very clear-cut. Sometimes, for some people, direct-deals are cheapest. And sometimes, for some people, brokers can source better deals than you can get direct.

It's the 'also's that make a difference, in my opinion.

Brokers also know how likely it is that you will be successful in your mortgage application and can save you time applying to lender who may reject you. HSBC has been consistently competitive over the last two years but it has a reputation in the mortgage market for being choosy about who it accepts, favouring the lowest risk borrowers. You broker will know the best alternative.

And brokers also know which lenders are currently taking a month to turnaround applications and which are taking two. This could be the difference between you getting and losing the home of your dreams.

And if that wasn't enough...

• Brokers are also fully qualified mortgage experts who have passed exams, have professional indemnity insurance and are authorised by the regulator to give advice.
• They are also open all hours, will meet you where it suits you and will do the donkey work on your behalf.
• Your broker can also search the market for the best insurance products for you too.
• If a new mortgage comes out that is better than yours, they will also let you know if you save money by switching -- you can guarantee you mortgage lender will not do that!

The choice is yours

Of course, if after checking with a broker, you find a better deal direct, you are under no obligation to take the one offered to you by the broker. And if the broker is fee-free, as all of lovemoney.com's brokers are, you won't be charged a penny for the advice you received.

What are you waiting for? You have nothing to lose - use lovemoney.com's innovative new mortgage tool to find the best mortgage for you online!

There is further help available

If you need any further help getting the best mortgage use our resources.

First, adopt this goal: Cut the cost of your mortgage and pay it off early

Next, watch this video: Getting through the mortgage maze

Then, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 4045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term will revert to the lender's standard variable rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.