First Time Buyer - Where can I find a better rate?

J_Lovibond

Hello All,

I am looking some advice on Fixed Rate Interest Rates, I have been in touch with a Mortgage Broker who has offered me the following on a 125K investment with 20K as a deposit:

Lender: Nationwide
Product: 5.84% for 3 Years (then SVR at 3.99%)
Available on anything up 85% of the properties value

The broker himself has said that he searches the whole market, with the recommendations suited to the client alone. But being the sceptic person who doesn't really have must trust in brokers, I find this hard to believe!

Does anyone have any advice? Shall I just go with what has been put in front of me or do I shop around and find something more suitable?

I have paid no fees to this Broker as he was recommended through an organisation in work, so I guess I do not have to go with his advice?

Any thoughts?

Cannon_Fodder

You could try a few banks directly, as they have some products that they do not share with brokers, and/or comparison websites.

DO NOT take anything the banks say as advice, though. They can only present their own products.

TrickyDicky

HSBC do not go through brokers and have been quite competative.

J_Lovibond

TrickyDicky wrote: »

HSBC do not go through brokers and have been quite competative.

Yes TrickyDicky they are highly competitive however they require a make loan to value of 75% I currently am residing in the 84% area, so I am quite limited.

kinglewis

Lloyds TSB are doing 5.09% and britannia are doing 5.69.. both with fees of around £995. I think Nationwide's fee is slightly lower.

Try this impartial FSA website.

http://www.fsa.gov.uk/tables/bespoke/Mortgages

I think your brokers offer is a good one.. always nice to double check it though! Remember: Whole of market brokers only have to tell you about the providers that use brokers... they are not required to point out the banks that only deal direct even if they are cheaper.

J_Lovibond

kinglewis wrote: »

Lloyds TSB are doing 5.09% and britannia are doing 5.69.. both with fees of around £995. I think Nationwide's fee is slightly lower.

Try this impartial FSA website.


I think your brokers offer is a good one.. always nice to double check it though! Remember: Whole of market brokers only have to tell you about the providers that use brokers... they are not required to point out the banks that only deal direct even if they are cheaper.

Yes Nationwide's fee is slightly lower than the rest with a higher rate of Fix, surely over the two years Nationwide will get there money back on the fee with this higher rate?

I think what I am going to do is settle for the Nationwide Fix for 2 years and see what the world is going to be like after that. Hopefully the SVR they are offering now!

neas

I wouldnt fix for 2 years.... i'd fix for 5 but thats my two-penneth.

J_Lovibond

neas wrote: »

I wouldnt fix for 2 years.... i'd fix for 5 but thats my two-penneth.

Can anyone tell me what are the pro's and cons of fixing longer than 2 years? Surely if I fix at 5.74 (2 years) and not 5.84 (3 Years) this would mean I am in a better situation of seeing what the market is like in 2 years?

What are the chances of the rates going down in the next couple of years?

luckyfool

In the short term (12-24 months) it is likely that base rate will stay relatively low, with rates potentially heading upwards in 18-36 months time. The danger with a short term fixed rate is that you fix in while rates are low, and come off the fixed rate when rates have started to head up. Thats the argument for a 5 yr fixed over 2 or 3 yrs.

Your strategy and thinking behind taking the 2 yr deal is relatively sound, but bear in mind that there is no guarantee that rates in 2 yrs when you come off the fixed rate will a)be any better and b)be available to you at all if your house value and mortgage amount mean that you do not qualify for any deals.... e.g. if the value of your house has fallen 10% then you could potentially need over 90% which if the market is anything like it is just now, would mean you would be left stuck on the SVR.

i.e. If you don't fix for 5yrs then you have to plan for the possibility that when your shorter term deal finishes you might be on the SVR for a while, and obviously that rate could well go up.

kinglewis

Interest rates are at a 300 year low... thats the argument for a longer term fixed rate.. even if it is paying a little more to secure the fixed deal.

Check out the last 25 years interest rate history...food for thought.

http://www.propertyinvestmentproject.co.uk/property-statistics/interestrates.php

J_Lovibond

kinglewis wrote: »

Interest rates are at a 300 year low... thats the argument for a longer term fixed rate.. even if it is paying a little more to secure the fixed deal.

Check out the last 25 years interest rate history...food for thought.

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very interesting indeed