People here say FIX, my advisor says different?

Scrubs

Heyaz...

First time buyer here, gave my mortgage advisor a call today (all of market advisor), and from what he was saying he would be recommending that I go onto a tracker rate just now instead of fixing. The deal he mentioned is a tracker from Lloyds, which was something like 3.15% just now, but it would let me jump anywhere I wanted at anytime with out incurring any penalties. (There was an actual name for this type of mortgage that I cant remember now!).

His ideas on it were that because the rate was so low, it was a good offer and it would enable me to enjoy that interest rate for now (his opinion that rates wont be going back up any time soon) and as soon as he thinks would be a good time to move to a fixed he would be giving me another call to advise.

Can kind of seeing where he is coming from as if I managed to stay on a rate that low for say about a year before fixing, it would be a good thing! Any opinions?

Dithering_Dad

Does he get a commission each time he arranges a new mortgage for you?

mintyfresh

FA's are only a small step behind Estate Agents for the biggest waste of time & money in the modern world. ALL the information they give can be found FOR FREE on the internet if you have a little common sense. FA's that charge rarely give value for money and the ones that don't have an agenda...

Fliss_M

Well you dont say what yor LTV is, so what you would be looking at otherwise. I own opinion is wouldnt be a bad thing IF you can keep your finger on the plus. I certainly wouldnt rely on him to call you.

My point being that by the time he calls you, it maybe too late for the best fixed deal

amancalledmartin

Like Dithering Dad says, he is probably hoping for more commission out of you. That's not to say his advice is not necessarily right for you, but just be aware there might be an ulterior motive. My FA gave me the same advice. Most people seem to be of the opinion that rates won't go up to the fixed rate levels within a year, possibly even within two. But you do have to be aware that when you come to change deals, you may well be getting a fixed rate a bit higher, possibly a lot higher than one you might pick now. if you can get a good one, a fixed rate of 3 years plus is a popular choice.

Just as a disclaimer - I don't claim to understand these things better than any layman. I only speak from my own decisions.

Scrubs

Thanks for the replies. I'm putting down a 25% deposit. Not sure about his comission side of things, I'd imagine that he does get a cut though from whatever mortgage company I go with? He also said that he likes to lay a few different offers on the table and explain them all and his reasons behind what one he suggests, but at the end of the day though he wants me to be happy with the choice I make as it's in his interest to keep me happy for any return work in the future... It's also him and his partners own business, they been going for about 15 years now (if that makes any difference lol).

Gorgeous_George

What is the arrangement fee? How much is the mortgage? Are there any ERCs to close the mortgage?

More info needed before a rational response can be given I'm afraid. Just the usual 'bloke in a pub' comments so far.

Your broker may be right (and may be wrong).

GG

TEDDYRUKSPIN

LOL. As you have already said. This is the advisors recommendation based on the interview the carried out. You must have said certain things to bring the advisor to this conclusion. Have you read the suitability letter on why the advisor has recommended this. No way, will they put what you said above.

As for all advisors have an agenda. LOL. First they must be paid. Nothing is free in life. People have lived a free rolling credit facility which has resulted in the credit crunch. No one saves. Everyone wants everything for free. No shop or retail is a charity. Even a charity shop sells things.

All the FSA at this current table publishes tables and rates of mortgages in their website, even that table is biased. They do not even show all rates throughout which is on offer. They can't. Reason being is that they simply change too fast.

The future will be that all mortgage will be advised anyway. You will not be able to get any through just look and swipe as on moneysupermarket. People believe they can get educated simply by reading books etc. But the FSA is now noticing major problems occurring regarding this.

eg. Previously many companies such as HSBC, halifax, B&B, TSB etc has mortgage introducers who would just carry mortgage on a non-advised basis. Basically like a tesco till. You come in, say you want this, and walkout.
From what I have seen, these mortgages which has taking place in the last 5 years have now all comeback as major complaints. Many of these people have walked out with any mortgage advice and financial planning advice.
Guess what? A good percentage of these clients have now made complaints on these banks that they were never advised on taking insurance such as unemployment etc. They have sued the banks which can not provide the documentation of the discussion. Scary.

After going way out on a tangent, I believe you should read the suitability letter and make your own decision. It will always be your own fault if it does'nt work out.

Ian_Griffiths_Halifax

Scrubs, you are gambling on the market not changing quickly and your advisors judgement on what is the best time to switch, as well as haing a good reminder system to let him know you have a penalty free product on a variable rate.

In reality, he probably wouldn't remember to give you a call because he'll not remember the product you will be on, and the first time he does something about it is when you call him to say your payments are rising. By that time it's too late as, if you think the rates are going to rise further, the lender is already at least a month ahead of you and will have more expensive products out.

If you are on a Fixed Income, then I would recommend more often than not, that you have a Fixed Interest Rate. A Capped Interest Rate would give you some security, but the lenders would normally Cap a rate at more than Fixed Rates available at the time you take the mortgage out.

Also note that usually ERC (Early Repayment Charge) free mortgages usually come at a cost, and that's often either a large up front fee, or a higher interest rate on the mortgage.

As a First Time Buyer you should also consider a Fixed Rate to get used to your monthly outgoings and having to budget, before risking a variable rate which gives you no control of your outgoings.

Ian_Griffiths_Halifax

Scrubs wrote: »

Thanks for the replies. I'm putting down a 25% deposit. Not sure about his comission side of things, I'd imagine that he does get a cut though from whatever mortgage company I go with? He also said that he likes to lay a few different offers on the table and explain them all and his reasons behind what one he suggests, but at the end of the day though he wants me to be happy with the choice I make as it's in his interest to keep me happy for any return work in the future... It's also him and his partners own business, they been going for about 15 years now (if that makes any difference lol).

If you are going to an Adviser, he should be giving you advice after analysing your situation. There should be NO need to "lay a few different offers on the table".

silvercar

Ian_Griffiths_Halifax wrote: »

Scrubs, you are gambling on the market not changing quickly and your advisors judgement on what is the best time to switch, as well as haing a good reminder system to let him know you have a penalty free product on a variable rate.

But surely a good advisor should have good judgement and a good reminder system?

He will also take into account all your financial circumstances and know your likely situation in a few years time.

Mine also advised me to track for now, based on knowing I could afford the mortgage if rates increased, knowing the size of mortgage I would need if I fixed now and the size I will need when it comes time to fix and a whole load of other stuff.