Is this mortgage okay?

pstones578

We're FTB. We have been advised to go with Northern Rock flexible fixed rate mortgage. 3 year fixed deal at 5.19% with 95% of the £134,000 property on the mortgage and we will pay the other 5% as a deposit. The product fee is £695. We also get £1,000 cash back at the start of the mortgage.

robwend

check out https://www.charcol.co.uk,

Ian_W

Peter,
With NR always check very carefully that there isn't an overhanging penalty of some kind when your fixed rate finishes. Could be a requirement for a further 12 months on SVR or requirement to repay the £1K cashback for a period after the fixed ends, if you leave NR.

I'd check with a couple of brokers and not go with the first scheme advised - who recommended this BTW?

AndrewSmith

Impossible to say as I dont know the exact scheme offered but I can definately confirm that Ian_W is correct.

Northern Rock do have an extra 12 month overhang on standard variable rate with their cashback product. The penalty in this final 12 month period is full repayment of the cashback.

Check very carefully on your quote under section 10 headed 'what happens if I dont want this mortgage any more'. This should clearly list the penalties and timeframe. If you dont have one insist that the person recommending it provides you one immediately.

Hope this helps

Andy

Ian_W

Hi Andy :wave:
Golly gosh I got it right again. Have to become one of you Mortgage Brokers types and earn shed loads a money . What was it again? CeMap, registered with FSA, network for compliance ... oh, sod it, can't be @rsed, too busy posting

davilown

Check what martin has to say about mortgages and the sites that are recommended - you can select what you want ie no overhang etc. This way at least you'll know was the best potential deal is

Good Luck

:beer: monster

pstones578

The overhang on the £1000 cashback payback penalty is 6 month's which I've been made aware of allready so I'm being told that I have to stay with NR for 3.5 years to keep the £1000. If after 3 years I find a better fixed rate deal that will save me £1000 in the 6 month's overhang I would switch then and pay back the money. I'm guessing that will not happen though. The advice came off a relative who is a mortgage advisor so due to my relationship I'm getting (I hope ;-)) decent advice based on my situation and not being told whatever gets the person the most commision.

AndrewSmith

Thought it would be something like that. As I said above without knowing the exact scheme it's hard to say for sure.

To be honest with you the commssion from different lenders generally for a like for like case will not vary that much at all. Mainstream lenders pay usually between 0.35 - 0.4 % of the loan or £350-£400 per £100,000 mortgage.

Also the justification process to satisfy the regulator is so tight these days that it would be almost impossible to recommend a less suitable product purely on the basis of higher commission.

Even with sub-prime lending the broker must justify his recommendations to the n'th degree to demonstrate best advice and suitability. After all he has a lot to lose if he is sued for bad advice these days.

Trust what he is telling you, the Northern Rock product is very good as long as you accept and understand the overhang, which in your case you cleary do.

Hope this helps

Andy