Interest rates have slowly started to move upwards, with a 0.25% rise in May and a further 0.25% rise in June, many people are working out whether they are getting a good deal for the mortgage. By Rizwan Sabir

A large number of homeowners remain on high standard variable rates (SVR) because they do not shop around for long-term value. It is estimated a third of the mortgage market is on a SVR (Financial Adviser: 24 June 40). If these borrowers shopped around to get themselves the best re-mortgage deal, the savings could be huge, potentially hundreds of thousands of pounds.

Here are a few points you should consider when taking our your first mortgage or re-mortgaging:

The Fee

Most lenders now offer fee free re-mortgage deals; the lender will pay for the valuation and all legal costs. Therefore it costs the borrower absolutely nothing to save money each month

First time borrowers need to be aware the Mortgage Indemnity Guarantee (MIG). This fee often goes unnoticed as it can be added to the loan over the term of the mortgage and therefore there is no lump sum payment made by the borrower at outset.

The MIG is an insurance policy to cover the mortgage when a large percentage of the purchase price is to be borrowed.

Not all lenders charge a MIG; by requesting a complete breakdown of all the fees and charges you could potentially save yourself thousands of pounds.

Interest Rate or Annual Percentage Rate (APR)?

Low initial interest rates may seem like an excellent deal at the time, however, you could find yourself tied to the lender after the initial period; after which payments may increase dramatically.

A true reflection in comparing mortgages is to consider the APR and the total amount payable by the end of the term. Comparison of the APR provides a direct and fair comparison of the overall costs throughout the term of the loan.

Redemption Penalties

Depending on the type of mortgage, on redemption there may be an additional charge made by the lender.

Nowadays, it is common practice for lenders to offer low initial rates for a short-term e.g. 12 months, yet have redemption penalties for 24 months.

(Sage Financial Management Limited is an appointed representative of Berkeley Independent Advisers Limited, which is authorised and regulated by the Financial Services Authority.)