Cashback Mortgages - what's the catch? & IFAs

Northerner

We need to remortgage, no sooner than end May as we have redemption on our current mortgage.

Currently with Halifax as are our bank and savings :rotfl: accounts. they have been fine and at times we have REALLY needed their 5 days grace period.

However, Northern Rock are offering competitive rates for 3yr fixed rate mortgages with £1000 cashback. MUCH less cashback than others I have seen but still a sizable sum. Is there a catch?

The other question I have is re: IFAs - is it better to use an IFA than arrange a mortgage yourself? We don't have any experience in this sort of thing AT ALL,.
Many thanks

payless

their £1000 cashback com,es with a 42 month redemption penalty

its supposed to be for "help with costs"

handy as a lot of NR fees are IMO higher than market average

a good mortgage adviser will assist in "number" crunching, as well as discussing suitability

herbiesjp

I think you will find that if you re-mortgage away from Northern Rock before 3.6 years is up then you have to re-pay the £1000.

Do you need the cashback?

There are better deals out there with no cash back

AndrewSmith

Spot on Herbiejsp,

I had a client ask me about this same product yesterday. 3.6 year tie in = return of full cashback.

Andy

Northerner

Thanks guys

I will def try and find an IFA. Is there anywhere to find one recommended locally? I have asked everyone I know but they don't do things like move mortgages I want a 3 yrs fixed rate with no overhang. DS starts school then and we can shorten the term once more then as I shall earn more.

Cashback was appealing but no, we can live without it!
TIA

payless

3.6Yrs ? - its actually 3.5 ( Fridat afternoon?)

seriously it worse than that ... its also repayable if you do an in house product swap within that 42 months

effectively restricting you ( by effect of fee) of swapping at end the 3 yr fixed period

( same 42 months applyt on 2 yr and the longer terms also)

suppose if rest of deal was the best ( forgetting the £1000 ) for you, paying back the the cashback if required would be no harm

Northerner

oh lord not looked much further than repayments & redemption. No idea if its good in any other way.

dunstonh

The other question I have is re: IFAs - is it better to use an IFA than arrange a mortgage yourself? We don't have any experience in this sort of thing AT ALL,.

A technical point here but handy to know if you do go down the advice route...

There are three classifications of advice. Designated investment (for example IFAs), general insurance (car, household insurance) and mortgages. An advisor can hold one area, two areas or all three areas.

You may find that an independent mortgage broker is more appropriate than an IFA with a mortgage. Indeed, many firms have advisors that concentrate only on mortgages and leave the IFAs to concentrate on the designated investment side.

So, if you go down that route, what you are looking for an an independent mortgage advisor (who may or may not be an IFA as well but that doesn't matter).

payless

IFAs... the terms start getting confusing

Basically the FSA regulate advisers who might advise on any 1, 2, or 3 of the following

1. Investments
2. General & Protection Insurance
3. Mortgages

To be called an IFA you must offer at least No1 and meet other conditions about fee options.

So an IFA does not always do mortgages, and a mortgage broker may not always be an IFA ( in fact very common these days not to be)

payless

as timings show Dun and myself posted at the same time!

dunstonh

ROFL payless - beat you by seconds