MSE newsletter - How to reserve a new mortgage deal now?

Scaredy_Cat_3

Can anyone advise me please? I've just received the regular MSE newsletter in my inbox and there is a bit saying if your mortgage deal ends within the next 6 months you could pay a small fee to reserve a good deal now.

I can't see any information of where and how to do this. Does anyone know please? I have spoken to my current mortgage lender and they say booking/arrangement fees are around £600, which isn't a 'small fee' to me - so does anyone know what Martin is referring to in the newsletter?

Barneysmom

Bumping this, my deal ends in November, I'm on variable rate at the minute.

Scaredy_Cat_3

Shameless bump in case anyone can help! If not, is there a way to contact the MSE team who put the newsletter together so I can ask them to elaborate on it?

dwsjarcmcd

Unfortunately £600 would be considered fairly small as an arrangement fee. They can run into thousands. As a general rule of thumb, small/no fee = higher rate, medium fee (which is where this would sit) = medium rate, and high fee = lower rate.

These can be added to the loan, but you are then charged interest. If you are staying with your current lender, then explore the options you have with them. If you are moving to a new lender, it is often best to add the loan to the mortgage, but pay it on completion. This way if the mortgage doesn't complete you MAY not be liable for the fee.
Often the deciding factor as to what size fee to pay is how big your mortgage is.

David

Scaredy_Cat_3

I didn't feel the newsletter read that way. For one thing, having worked for a mortgage company, I know that you can only buy into (or reserve) a new deal about 6-8 weeks before it comes into effect, yet the newsletter is suggesting you can reserve a deal 6 months ahead! Where I worked they would say they didn't even know what deals would be available 6 months into the future, and the deals available now will almost certainly have been withdrawn by then.

So if this is what Martin meant I think he should have made it clearer.

And I still don't accept that anyone on this site (particularly on this site) can realistically call £600 a small fee! Especially when doing it this way would mean you pay this sum for nothing and then pay yet another enormous fee to maybe get a different deal if a better one comes along. Surely that goes completely against the ethos of the site?

Again, if this is what Martin actually meant, then he has sadly gone down in my estimation.

lju

With some banks for example First Direct. You can reserve a fixed rate mortgage up to 6 months before you need it. You ring them up and pay the booking fee. You are then allowed to get that rate any time in the next 6 months, if the rate goes down you can re book the rate and you just lose the booking fee.

Scaredy_Cat_3

Thank you - I wasn't aware of that! Do you know what kind of booking fees they charge?

lju

Scaredy_Cat wrote: »

Thank you - I wasn't aware of that! Do you know what kind of booking fees they charge?

These are first directs current fees:

Fixed rate Mortgages

2 year fixed rate offset Mortgage

5.98% for 2 years, reverting to our standard variable rate for the remaining term, currently 6.00%.
The overall cost for comparison is 6.4% APR.
(An arrangement fee of £1,499 and booking fee of £499 apply to every £400,000 or part thereof)
2 year fixed rate offset Mortgage

6.39% for 2 years, reverting to our standard variable rate for the remaining term, currently 6.00%.
The overall cost for comparison is 6.3% APR.
(An arrangement fee of £399 and booking fee of £99 apply to every £400,000 or part thereof)
3 year fixed rate offset Mortgage

5.95% for 3 years, reverting to our standard variable rate for the remaining term, currently 6.00%.
The overall cost for comparison is 6.2% APR.
(An arrangement fee of £299 and booking fee of £299 apply to every £400,000 or part thereof)
5 year fixed rate offset Mortgage

5.95% for 5 years, reverting to our standard variable rate for the remaining term, currently 6.00%.
The overall cost for comparison is 6.2% APR.
(An arrangement fee of £299 and booking fee of £299 apply to every £400,000 or part thereof)

Scaredy_Cat_3

Thanks - that's interesting to know!

dwsjarcmcd

It is normal practice to reserve a rate 3 to 6 months in advance, it is not just FD that allows you to do that, but all lenders that I know of.
Whether you think £600 is or isn't a 'small' fee doesn't really matter. You can't look at a fee in isolation, you must consider the rate that goes alongside it. If you don't want to pay a fee then fine, pick a product that has no fee, but it will have a higher rate.

koexelek

Abbey used to allow you to book a rate well in advance, but you only paid the arrangement fee if you actually took the mortgage out.

However, because so manty people were chancing their arm, they introduced a £150 booking fee ( up front) recently.
I've just heard on the grapevine that they are looking to stop charging the booking fee up front again.