Be the loan ranger

Home loans costs are back to levels last seen when the Beatles ruled the hit parade. Now it's Emma Bunton and Hear'say topping the charts.

But it's not just the style of singles that's changed. Back in the mid-60s, home loans came in plain vanilla - and you had to grovel to get one.

Now the range has never been wider or more confusing, whether it's a first time purchase or a remortgage.

Home buyers need to find the best value. And the best way to do that is to always talk to at least three banks or building societies and three independent brokers.

But mortgage advice is unregulated. So borrowers also need to avoid being tied up in the small print that can turn an apparent bargain into a nightmare. They cannot turn to the financial services authority if they end up with a bad deal or suspect they have been "mis-sold".

Jobs and Money has teamed up with lender NewWorld to offer some pointers:

• Look at the APR

The headline-quoted rate on a mortgage states the rate of interest you pay. In contrast, the APR reflects the total cost of credit including the interest, charges, fees or compulsory insurance purchases that the borrower has to pay for. The bigger the gap between the two, the more likely it is that fees and other charges are involved.

• Come-on rates

Ask whether a cheap introductory rate reverts to an expensive standard variable rate, and how long any tie-in will be. You could find the low cost months are more than offset by expensive repayments later. It's not worth paying for one year of lower payments then 24 years of uncompetitive ones. Find out what you might be forced to pay when your short-term deal ends. These days it can often revert to a very high rate.

• Extra repayments

When inflation was high it made sense to delay paying as long as possible. But now you should make overpayments when you can afford them and pay off your mortgage ahead of schedule. Ask whether you will penalised.

If paying off debt saves you £200 in interest but your lender charges you £250 for this, there is no benefit. Always ask for specific examples - avoid banks which say penalties are tied to money market rates.

• Will I pay fees?

Some home loan deals add on substantial legal, valuation and other charges. Others say these are "free" or offer a cash amount to pay for them.

Ask for illustrations showing repayments on the loan with no extra charges - and compare that with the rival loan plus the costs.

• Can you extend the loan?

Find out whether you can increase the amount borrowed and how much this might cost. You need to know what will happen if you need an emergency loan.

• Ask what flexible features apply

The right to overpay is the most important flexible feature because the benefits of reducing the interest you pay can be substantial. Daily interest calculation is now commonplace.

Payment holidays can be useful for lifestyle changes such as having children - but they can be a trap leading to higher payments later.

• Fixed vs variable

There is some evidence that variable rates are cheaper over the longer term. But the real choice for homebuyers is not between one price level and another but between the security of monthly payments with the fixed loan and taking a chance on the variable rate. For those who can afford to live with the ups and downs of interest rates, the second option, which avoids the costs that monthly certainty bring, could be better.

Fixed interest loan buyers should also watch out for possible future shocks when their deal ends - if rates increase substantially, their monthly payments will leap.

• Length of deal

Almost everyone has some sort of deal - a fix, a discount, a cashback offer - when they start a new loan or remortgage an existing arrangement. Short-term deals often seem better value and offer greater flexibility. But each new loan involves new fees, so don't forget to factor these into the equation.