fied rate mortgage dilemma

herbiesjp

There are a few lenders offering 3.99 rates

Jay1b

Thanks, but any ideas which ones? I still cant find anything below 4.44%

Ian_W

Jay,
Have a look at this thread:
http://forums.moneysavingexpert.com/showthread.html?t=153523

Both fixed and trackers mentioned at 3.99% but VERY big arrangement fees and some deals through brokers only, not direct. You would have to work out if the 0.3% reduction in rate [about £30pa per £10K borrowed] outweighed those fees over the term.

KTF

My spreadsheet may help if you want to compare the deals.

bbruce

herbiesjp wrote:

There are a few lenders offering 3.99 rates

These headline rates can be misleading with the variety of charges not included.
Many quote a "rate for comparison"; I assume those that don't are bad value. Is this a true basis for comparison?

herbiesjp

bbruce wrote:

These headline rates can be misleading with the variety of charges not included.
Many quote a "rate for comparison"; I assume those that don't are bad value. Is this a true basis for comparison?

The rate I quted was a pay rate - and not from any particular lender - I have not mentioned any fees

How can this be mis leading?

bbruce

Its misleading in that some people might think they can get a mortgage at 3.99%. See the subsequent posting by Ian W.
Rather than post the rate for comparison, companies are forced to grab your attention this way.
Its a good place to start doing a true comparison, with KTF's spreadsheet maybe, as I'm sure they're all reputable.

herbiesjp

@ bbruce

People can indeed get a mortgage at 3.99% - that is the actual pay rate.

You will find that any advertsing with rates has strict FSA guidelines to follow - any breach of which can have serious problems for those involved.

As stated previously - go onto the lender web site and have a look, and ask them for a Key Facts Illustration - this will show in in section5 under the heading " Overall cost of this mortgage" what the overall cost for comparison is. All illustrations have these figures.

AndrewSmith

The rate I have quoted of 3.99% is the rate payable for the product. I am not advising or recommending a particular product or lender, purely stating (as it says in my signature) generically that there are mortgage products available today on a tracker basis with an opening interest rate payable of 3.99%. It is therefore not misleading as it is perfectly possible for people to get a mortgage with a pay rate of 3.99%.

Taking the figures and rates posted by others previously let's compare the two rates of 3.99% and 4.44% by calculating the monthly repayments, assuming a £100,000 mortgage, 25 year mortgage term including generic fees for this type of product. I say generic fees as I am sure that it is possible to obtain such products with different fee levels, just giving a general comparison before everyone jumps in with "I've seen one with lower fees than that".

3.99% £100,000 plus 1.5% fee Total loan £101,500.
Repayment Mortgage £535.19 pm / Interest Only Mortgage £337.49 pm

4.44% £100,000 plus £450 fee Total loan £100,450.
Repayment Mortgage £554.92 pm / Interest Only Mortgage £371.67 pm

When you talk about 'true cost for comparison'. I assume you are referring to the APR figure? The APR figure assumes, amongst other things, that the mortgage rate will not fluctuate throughout the entire 25 year term, and that you will stay with that lender paying their standard variable rate (at today's rate) for the entire mortgage once off the initial incentive period. Also check the KFI issued for the product as that will clearly state the 'Total Amount Repayable' usually on page 2 section 5.

However I completely agree that the consumer must gather all the facts they need to satisfy their own mind that a particular mortgage product is right for them. After all, no two clients or situations are the same so there is no set formula. This is where we as brokers can assist the client as, on the whole, an independant broker will bear no loyalty or allegiance to any particular lender or group of lenders. Check that the broker does in face have access to all lenders, and is not restricted to a limited panel as with a lot of Estate Agency or Corperate company firms. Such firms although having limited market access are still able to call themselves 'whole of market' as they can, in simplistic terms' offer every type of mortgage from the marketplace.

Andy

busiscoming2

thanks guys -
have got L&C phoning me this afternoon so I shall see what they say!

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