Depending on which type of mortgage you are looking to take out will determine whether you get a better rate of interest.  Many people who are on a tighter budget will find that a fixed rate mortgage offers them the security that they need, you may not get the best mortgage rate with this type of mortgage but there are other benefits.  The fixed rate mortgage will allow you to know exactly what your monthly payments are going to be over the next two to five years.  For many people this is critical especially if the economy is struggling and inflation is increasing, with rising inflation the basic items that are needed in life such as food and fuel are raising in price.  The pressure can be felt by many people and an increase in interest rates even by a quarter of a percent can be enough to tip the balance.  On the other hand if the market turns and confidence returns then it could be the reverse and it is possible that you may find interest rates will fall below the best mortgage rate that you have been set in your fixed rate mortgage.  For many it is a question of balancing security and peace of mind against uncertainty.

If you are looking for the best mortgage rates available then you will need to have a flexible mortgage that tracks the base rate of interest.  This will only be the case if the base rate of interest is falling, the best mortgage for this will be a standard variable rate.  The standard variable rate mortgage applies when you are not taking one of the more competitive deals at the beginning of your mortgage term.  So how can you achieve the best mortgage rate with a standard variable rate mortgage, the answer to this question lies with the bank of England and the base rate of interest.  The fundamental make up of a standard variable rate mortgage is that it will generally rise or fall depending on whether the bank of England put up the base rate.  The base rate of interest can be changed on a monthly basis and a lender will tend to pass on any rise or fall to the consumer.  As you can see if the base rate was to fall considerably then you could well be paying less in interest per month than somebody who was on a fixed rate mortgage set at a higher interest rate.  In general a lenders will have the best mortgage rates around one to two percent above the base rate of interest.  This all sounds like it could be the best way to achieve the lowest interest payments for your mortgage, and it could be if the economy is doing well and the interest rates remain low.  However, it could have the reverse effect due to there being no ceiling set on a standard variable rate mortgage, and if the worst did happen and interest rates were to rise significantly it would be undoubted that the mortgage lender will pass on the percentage increase to your mortgage interest rates. 

Over the last three years the base rate of interest has been set between 4.5% and 5.75% so the consumer would have seen some increases in the monthly payments of interest on their mortgages.  An increase of 1.25% may not seem like a huge amount but on a mortgage of £200,000 this can equate to over £200 per month increase in mortgage payments, for many people this increase could be too much.  In the last few months mortgage rates have fallen slightly and this will be good news for many borrowers and the majority of lenders should pass these reductions onto their mortgage rates.  Make sure that when you are looking into a new mortgage option you give yourself plenty of time to investigate the market, it takes a long time to sort out a new one and ideally you want to start the process before your current one ends.   

If you have reached the end of your current deal and are on your lenders standard variable mortgage rate then now is the time to investigate moving to a different mortgage.  Many people will be switched to the standard rate and not take the time to investigate a new deal, remember even a small increase in the rise of interest of 1% could cost you an extra £1,000 per year on a £100,000 mortgage.  Always keep on top of your mortgage and look out for the best mortgage rates and deals that you can find, switching at the end of every mortgage term will enable you too not only reduce the amount you are paying in interest but also clear the entire mortgage early.   If you do not have much time on your hands then you may like to consider contacting a reputable mortgage broker to investigate the best mortgage rates and deals that would suite your requirements.  No matter which option you take always be sure to keep on top of your mortgage, keep switching between lenders and packages to get better deals and the best mortgage rates.  Compare the mortgages online and before you undertake any financial commitment make sure you have flexibility within your finances to cope with interest rate rises or additional charges the lender may have.

A mortgage calculator is available to check your monthly mortgage payments. The mortgage calculator is a simple and easy to use tool which determines your mortgage payments