Last reviewed: June 2026
TL;DR- The headline interest rate alone does not identify the cheapest mortgage - fees must be included in any meaningful comparison.
- The APRC (Annual Percentage Rate of Charge) is a standardised total cost measure but has limitations for mortgages with initial deal periods.
- Total cost of credit over the initial deal period (rate + fees + cashback) is the most useful comparison metric for most borrowers.
- Product features (ERC terms, overpayment allowance, porting) matter alongside rate and fees for borrowers who may sell or overpay during the deal period.
Why the Headline Rate Is Not Enough
Two mortgages at 4.5% and 4.7% look straightforward to compare - the 4.5% deal is cheaper. But if the 4.5% deal carries a £1,999 arrangement fee and the 4.7% deal has no fee, the comparison depends on the loan size and how long the borrower holds the deal. On a £150,000 mortgage over a 2-year deal, the 4.7% no-fee deal costs less in total. On a £300,000 mortgage, the 4.5% deal with fee likely wins despite the higher upfront cost. The comparison requires modelling both the interest saving and the fee cost over the deal period.
The APRC and Its Limitations
The FCA requires lenders to disclose the APRC (Annual Percentage Rate of Charge) on mortgage products. The APRC is calculated on the assumption that the mortgage runs for its full term at the product rate and then at the SVR for the remaining term. Because most borrowers remortgage rather than revert to SVR, the APRC is not a useful guide to actual total cost for the initial deal period. The APRC is useful for comparing two products with the same structure, but misleading for comparing a 2-year fix against a 5-year fix where different amounts of time are spent at SVR before remortgaging.
True Cost Comparison Over the Deal Period
The most useful comparison for most borrowers is the total cost over the initial deal period: monthly interest costs + arrangement fee - cashback (if any). This should be calculated for the specific loan amount and deal period. Most major lenders and brokers provide comparison tools that calculate this. Key steps:
- Calculate total interest cost over the deal period at the product rate.
- Add the arrangement fee (whether paid upfront or added to the loan - if added, include the extra interest cost).
- Deduct any cashback offered at completion.
- Compare the resulting total across competing products.
Product Features to Compare
Beyond rate and fees, product features affect the value of a mortgage for specific circumstances:
- ERC structure: a declining ERC is better than a flat ERC for borrowers who might sell or remortgage mid-deal. No ERC (common on trackers) is best for maximum flexibility.
- Overpayment allowance: 10% annually is standard; some products allow more. Important for borrowers who plan to overpay significantly.
- Portability: the ability to transfer the mortgage to a new property without triggering the ERC. Essential for borrowers who may move during the deal.
- Offset facility: where savings can be linked to offset the balance and reduce interest. Valuable for borrowers with substantial liquid savings.
- Free legal / free valuation on remortgage: reduces the switching cost when comparing remortgage products.
Using a Whole-of-Market Broker
A whole-of-market mortgage broker has access to products from across the lender market, including some products not available directly to borrowers. The broker can model the true cost comparison across relevant products for the borrower's specific circumstances and LTV. Broker fees vary - some charge directly, others receive a commission from the lender. Both the broker's advice quality and their product access should be considered when choosing a broker.
Frequently Asked Questions
Should I always choose the lowest rate mortgage?
Not always. The lowest rate mortgage may carry the highest arrangement fee, which can make it more expensive than a slightly higher-rate, no-fee alternative, particularly on smaller loan sizes or shorter deal periods. The total cost over the deal period - rate cost plus fees minus cashback - is the correct comparison, not the rate alone.
What is a mortgage best-buy table and how reliable are they?
Best-buy tables rank mortgage products by their headline rate within LTV and product type categories. They are useful for identifying competitive products but do not account for individual eligibility (not all products are available to all borrowers), fees (a rate-only ranking ignores fee cost), or product features. They are a starting point for research, not a definitive guide to the best product for a specific borrower.
How do I compare a no-fee high-rate mortgage against a low-rate high-fee mortgage?
Calculate the total interest cost over the deal period for each, then add the fee (or subtract cashback). The break-even loan size above which the lower-rate, higher-fee product wins can be calculated: divide the fee by the annual interest saving (as a decimal), then divide by the number of years in the deal. On a 2-year deal with a £1,000 fee difference and a 0.2% rate difference, the break-even is £1,000 / (0.002 x 2) = £250,000. Below £250,000, the no-fee product wins; above it, the lower rate wins.
Do I need a broker to compare mortgages or can I do it myself?
Direct mortgage comparisons are possible through lender websites and price comparison sites. However, a whole-of-market broker has access to a wider product range (including some lender-exclusive products), can assess eligibility across multiple lenders simultaneously without multiple credit searches, and can advise on which product features matter for specific circumstances. For straightforward remortgages at competitive LTV, direct comparison is feasible. For first purchases, complex income, adverse credit or specialist properties, broker advice adds significant value.
