how long is a piece of string

lkmc01

Hi

My partner and I are having a second viewing of a house we like. Its valued at £90,000. Been on market 2 months and not reduced in price. We have 20 grand deposit and had an appointment with an independant broker type mortgage advisor this morning. Our jointed income is 20 grand a year and we have one son. She says that there are 2 or 3 year fixed type mortgages on around monthly repayments of £380 and on a 5 year fixed this would be £420.

The question is, her fee would be £395 to set up the mortgage through her and for her advice. Should I forget about this and just set the mortgage up myself directly with the leader? After all I can use the mortgage comparison sites myself.

So, with that in mind, which are the best mortgage comparison sites?

kingstreet

Is she offering to rebate the commission back to you if the best deal is a product where a fee will be paid by a lender to the broker? If it is, your £395 will end up a fair bit lower.

Alternatively, will she find you the best deal from the "direct-only" products, help you prepare for a lender meeting and write-up your case as an "advised" case?

Otherwise, you're going to have to ask yourself are you capable of working out what is the best deal for you and being willing to accept responsibility if you get it wrong?

If you go direct to a lender, you get information and you decide what to choose. There is no "advice" and no resulting protection.

You need to take into consideration;-

Upfront costs and fees, early repayment penalties, reversion rates, the lender's service, the lender's criteria, your future needs, any short-term changes which may be required, the property you're buying, your desire to make underpayments, overpayments, take payment holidays, the lenders attitude if you fall into arrears and a few more I can't remember...

Going through the broker means you get professional analysis of your circumstances, detailed sourcing results showing you the options and a written recommendation of why the product recommended, best suits your needs. That advice stands as a record to which the broker can be held to account.

Obviously this has a cost. The requirements for simply being able to give mortgage advice require qualifications, authorisation by FSA, compliance monitoring, professional indemnity cover and subscripition to the Financial Ombudsman Service and the Financial Services Compensation Scheme.

How you proceed depends on your understanding of the products and their pitfalls.

mac2008

You might be pushing it to get 70k on a 20k joint income. Do you have separate money to pay for solicitors, surveys, moving etc? If your choice of lenders is going to be a bit restricted (which I suspect is the case) her knowledge and experience might be very valuable.

As for comparison websites, I quite like comparethemarket (although hate their annoying subliminal TV adverts)

Finally, a piece of string is twice the length from its centre to its end. Simples

lkmc01

she offered no rebate of commission. we had another appointment with a broker mortgage advisor at £295. he was not whole market but came up with a very similar mortgage rate. i was just going to ise http://www.moneysupermarket.com/mortgages/mortgagesstep1.asp?purpose=3&joint=0&location=0

lkmc01

and yes, we do have additional mortgage costs. Plus my dad has offered to pay for surveys and removals.

lkmc01

the advisor has already taken our details and recommended a mortgage for free.

lkmc01

I'm thinking of going for a 5 year fixed type mortgage. Also she was talking about mortgage protection at £50 a month!!! Don't think we are going to bother with that. Will sort of our building and content insurance out and gamble on everything else. Mind you life insurance would be cheaper than £50 a month. We are not even 30 years and in good health

kingstreet

Comparison sites are fine but they don't sit and establish all your circumstances and needs with you. You can get an idea of what's available from them but you've no idea if you will meet the lenders' criteria unless you apply to each one for a decision in principle, logging a credit search footprint every time...

Comparison sites also get paid commission and they take no responsibility for the information given, or your choice.

As I said, only you know if you have the knowledge to take on responsibility for selecting your mortgage product or whether you'd be better using the advice process.

lkmc01

I have had 2 soft credit searches done now in as many weeks. The mortgage advertiser I spoke to this morning seemed to think that we could have as many as we liked and it wouldn't affect our ratings. I did question her on this but she was sure it did not affect anything.

kingstreet

How to protect your home and your mortgage is an entirely different matter and I'd suggest keeping that separate until you've worked out how to get the best mortgage.

Again, that is going to be down to addressing the things you would be most concerned or affected by. Losing your job may be a more urgent and immediate consideration than losing your life. Only you can decide that, but leave it until later, like I said.

On the face of it, you want to buy for £90k with a £70k five year fixed rate? At that level, you'd probably be better off with a product with low/no set-up costs, rather than a keen rate with a big fee. Ask your Dad to give you the money, rather than give it to a lender. Most lenders have tiered rates and you're looking in the 80% tier, as the mortgage you want is 78% of the value of the property. How about using some cash from Dad to increase your deposit to £22,500 to get a 75% mortgage, then going for a product with no arrangement or other costs?

How about Barnsley Building Society's five year fix at 4.99% until 30/4/2016 for upto 75%? There's no arrangement fee, the valuation fee is £235 for the property you're interested in. £394 per month for a £67,500 mortgage over 25 years.

Also worth taking into account where you are in the country. Some lenders have great deals for those who live and/or buy in their area. The Cambridge and Dudley Building Societies are two, off the top of my head.