Is 4.99 really the lowest we can get?

hedgehopper_2

Really disappointed that our broker has come back with 4.99 as the lowest possible rate for our 3 yr fixed rate mortgage

We were quoted below 4% when we started looking, based on purchasing a property at a similar price and LTV than the one we've gone for in reality.

Our broker is saying it's because the property we want to buy is share of freehold. I knew that put some lenders off, but it seems to be worse than expected. Is it worth the risk of spending some time shopping around for a better deal?

It's almost making us re-think the purchase! Are we being unrealistic? (we have a 20% deposit, 25% at a push and are FTB in London).

herbiesjp

Share of freehold is pretty common London - purpose built blocks etc.

Unless there is something else that is limiting lenders, or you are asking for something in particular, you should be able to go lower.

If you do not feel happy, then get a second opinion - that way it will either confirm or not that the 4.99% deal as being the best for you.

hedgehopper_2

Thanks herbiesjp, that's reassured me to go with my instincts. They are pushing us to go for this particular deals as it has low set-up costs and is likely to be taken off soon, but it's a false economy if we're paying £200 a month more than we need to be for the next 3 years.

I don't think there is anything else 'odd' about our application; although I am self employed, the amount we want to borrow is less than 3x my partner's salary so they said I would not be considered as a liability. Other than that, it's just the fact that we haven't had loads of credit in the past - I've paid off personal loans and have a credit card, but apparently this debt is considered minor! What a funny old life.

Will speak to another broker today I think.

herbiesjp

Am I right that it is a purpose built block?

How many floors does it have?

Is it ex-local authority?

These are also things that could limit lenders for you.

ray123

As already suggested, get a second opinion.

There are two key questions to ask a broker

1. “Are you whole of market?”

This means, asking: “Will you look at all the UK’s mortgage lenders to pick
the best for me?” If not, forget it. Unfortunately, the FSA left brokers a loophole,
allowing some to claim ‘whole of market’ status while offering only a panel of
lenders, providing it’s reviewed to include the ‘best deals’ roughly every two
months. This is simply not often enough in the UK’s fast-moving mortgage
market.
The more advanced question: “Could you, right now, source a mortgage
for me from any available UK mortgage lender?” should help cut the wheat

from the chaff.

2. “How will you make your money?”

Brokers have two sources of income.

Commission. Almost all lenders pay brokers a ‘procuration fee’ worth a
whopping 0.3% to 0.5% of the mortgage’s value, rising to 1% for ‘sub-prime’
mortgages (for people with poor credit). On a £150,000 mortgage that’s £450
to £1,500.

Fees. Brokers may also charge you a fee directly. No reputable broker will
charge more than 1.25%, even for ‘sub-prime’ customers. Do not use anyone
charging more. Obviously, the prime MoneySaving route is to go for a fee-free
broker. But if you find someone you like, willing to spend time with you, with a

low fee, go for it.

You could have a look at the mortgage guide provided by Martin for further information:
http://www.moneysavingexpert.com/mortgages/mortgage-guide

hedgehopper_2

herbiesjp wrote: »

Am I right that it is a purpose built block?

How many floors does it have?

Is it ex-local authority?

Hi again. It's a purpose build maisonette with 2 floors. Not ex-local.

Just spoke to another broker who pretty much said the same thing - that 4.99 would not be a bad rate for us. She suggested going for a 2 year fix instead of 3...I wonder if there's any mileage in that.

jockosjungle

If you can stretch to 25% then I found you a 3.99% deal with the Post Office or 4.29% with a 15% LTV. Plenty of others on Money Supermarket. All on 2 year fixes

Don't trust brokers to find you the best deal, the difference with the PO ones there is they don't deal with brokers, quite a few don't as neither do HSBC

However the broker can see these rates, they've just not told you about them as they aren't going to make much or any money on them.

Do some digging on the internet yourself, visit your local branch. Don't just rely on an broker. www.moneysupermarket.com is a place to start for some rates

jamesd

hedgehopper, First Direct offer a 75% LTV 4.39% fix for three years with some fees and they do accept at least some arrangements where the flat itself is leasehold and you're buying both the lease and the share of the freehold. It's easy enough to give them a call to discuss your situation.

jbsurrey

Give Post Office Mortgages a go - 15% deposit and you get 4.29%

25% and you get 3.15% 2 year fix:

postoffice.co.uk/portal/po/content2?catId=86700737&mediaId=102800763

Also, Britannia and First Direct also offer good rates...

I think all of the above are mortgage companies that do not use intermediaries... Could be wrong though.

Jason

TighterThanTwoCoatsOfPain

hedgehopper wrote: »

...
It's almost making us re-think the purchase! Are we being unrealistic? (we have a 20% deposit, 25% at a push and are FTB in London).

If thats serious and its due to the extra amount it'll cost you then I really wouldnt be buying..

4.99% was a cracking rate less than 2 years ago and is well below the long/medium term average.

When i bought my first house 9/10 years ago people locked in at 7% to grab the good rate...

Good luck with the mortgage hunt

(FirstDirect ftw!) :money:

hedgehopper_2

TwoCoatsofPaint> haha, well I do take your point, but it's not that we can't afford it, it's just that we thought we could get it lower. It's not like we'll struggle massively but we were quoted well under 4% when we started looking. Thanks for the input anyway - I no longer feel ripped off!