Cut your monthly mortgage payment while you still can

Christina Jordan rounds up April's top best-buy mortgage deals and shows you how to cut your monthly mortgage payment.

Spring has sprung, the mortgage market is recovering and lenders are launching juicy new deals. There’s a lot to smile about if you are a homebuyer or looking to remortgage. And it’s even getting better for first-time buyers too.

First-time buyer mortgage boost

In fact, according to figures released from the Council of Mortgage Lenders (CML) last week the number of first-time buyers in February was up 13% on January, and a massive 40% higher than last February.

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In terms of value the rises were even greater. The 12,600 loans advanced to first-time buyers during the month were worth £1.5bn, 15% up on value compared to January and a whopping 50% higher than a year earlier.

The increase is more pronounced because January actually saw a slump in first-time buyers, following the well-documented spike in December as buyers rushed to beat the Stamp Duty deadline.

As a result January figures were always going to look low, and therefore February figures had a good chance of bouncing back, but it’s still great to see that first-time buyers have returned to the market. Following the January blip it looks like things are back on track for a slow and steady recovery.

Mortgage lenders are doing their fair share to help, with more and more deals being launched for those with a small deposit. It’s now possible to borrow at under 5% with just a 10% deposit and if you can scrape together 15% upfront you can get mortgage deals at less than 4% interest.

• Ask a question on Q&A about mortgages

Below are some of the best first-time buyer mortgages:

15 fantastic first-time buyer mortgage deals

Compare mortgages at lovemoney.com

Buying mini-boom

The number of loans advanced for house purchase increased by 12% in February, according to the CML.

There were 35,000 loans advanced (worth £5 billion) which the trade body said signifies a modest recovery, although they were up by a significant 49% in volume and by 67% in value from a year earlier.

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The house purchase figures include both first-time buyers and home movers and it was the increase in first-time buyers mentioned above that helped boost house purchase numbers. Although it’s also true that the number of home movers increased, albeit by a smaller degree, rising 11% by number and 6% by value compared to January.

Affordability for home movers is currently good, says the CML, with an average loan-to-value ratio of 67% (meaning movers have an average deposit of 33%), average income multiple of just 2.81 and buyers spending a tiny 9.6% of income on mortgage interest payments.

• Adopt our goal: Cut the cost of your mortgage and pay it off early

Rise in switching

Purchasers have dominated the market in recent months as switching has slumped, but February saw the first increase in remortgaging for five months.

It was only a small rise, with the number of borrowers switching only edging up 2% to 24,000, a figure that is still weak by historic standards. Indeed, it’s expected that remortgaging will remain pretty low for the time being, at least while interest rates remain low. After all, why move your mortgage if your lender’s standard variable rate (SVR) is still extremely low as many are?

Finally, the CML noted that fixed rate mortgages remain less popular than in the recent past, accounting for 47% in February 2010, unchanged from January and the lowest share in around five years.

The share of tracker products in February was 36%, again unchanged from January, but remained at its highest level since the CML began recording this data in March 2005. Trackers are priced so competitively in the current market it is tempting for borrowers to go for the short-term savings. And with the economic landscape so uncertain, it’s perfectly possible rates could remain low for some time.

If you are thinking of changing your homeloan, either because you are moving house or just because you want to remortgage, there are now some really attractive rates on offer. Here’s some of the best current deals for those with at least 25% equity:

10 top variable deals

Compare mortgages at lovemoney.com

10 fabulous fixed rates

Use lovemoney.com's innovative new mortgage tool to find the best mortgage for you online.

Still need help?

If you need a bit more guidance on how to get the best mortgage, 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.

Mortgages suitable for first time buyers with a maximum 15% deposit, sourced based on lowest payrate. Where a provider's logo is displayed products may be applied for directly.

Offset

Mortgages with an offset facility attached, sourced based on lowest payrate. Where a provider's logo is displayed products may be applied for directly.