Deal direct or go through IFA? Please advise me.

Beatrix_Kiddo

I am with A&L on my current mortgage. In order to avoid paying the ERP of about £2.5k :eek: I am thinking of porting my mortgage with them and 'topping it up' to the new amount I require. In the process, the mortgage will go from being in my name to a joint one with the OH.

Question: should I do this direct with A&L, or use the original IFA I used (v good) to negotiate the top up? I only ask, as the way A&L explained it to me when I spoke to them this week was that I would have:

a) original mortgage, tie in ends Jan 08

b) top up 2nd mortgage, under new terms and conditions (thinking of 2yr fixed deal in light of current market)

........meaning one payment per month to effectively 2 mortgages.

It all gets a bit complicated when you look at what expires when, and what I'll be paying for x number of months, then y number of months etc. but seems to be to be better financially than remortgaging in one lot and losing the £2.5k ERP.

I liked using the IFA last time, as he did the lot, it was great. And I think he got me a good deal. Especially as I will be adding OH to the loan (thinks: will it be complicated?) But I don't know if it is the right thing to do, i.e necessary?

Please advise.

BK.

AndrewSmith

If the IFA gave good service then why not use him again? As you are porting it will involve a new application etc thus you have nothing to lose by going via the IFA.

Tallymanjohn

I may have a bitter & twisted point of view in this but if you use an IFA you will probably providing him/her with just another source of income for life - they don't just get 'one-off' payments, they will get a percentage of every payment you make to the financial institution concerned - it will probably be eventually absorbed into the 'operating costs' of the policy/mortgage but they are still getting it. If you go direct, there's still a 'notional' deduction which just disappears into the ether, but at after that, anything you pay to the provider should be 'sans commission'. You may deduce from this that I do not rate the services of IFA's I've encountered over the last 30 years very highly!!

AndrewSmith

Incorrect. Mortgages provide a once off commission payment, and do not provide ongoing commissions.

That only happens with certain protection/investment plans.

Anyhow, the cost of the commission is not passed on to the consumer in any way for the mortgage. If that were the case then IFA's / brokers would not be able to obtain cheaper than high street rates.

herbiesjp

Tallymanjohn wrote:

I may have a bitter & twisted point of view in this but if you use an IFA you will probably providing him/her with just another source of income for life -

Not with an A&L mortgage they wont.

HTH

payless

And whilst we don't know the figures / circumstances involved , I know in most "top up" cases I try and ensure the penalty periods are equalised ( ie whilst keeping existing rate - maybe topup with a no tie deal, so you can combine it all into one deal in jan 08 more easily).. might not work out here, but should be explored


( Note this is a slip ... I was not planning on posts this week ! .. but the shock of Ken's reply on other thread caught me off guard)

toonfish

Tallymanjohn wrote:

I may have a bitter & twisted point of view in this but if you use an IFA you will probably providing him/her with just another source of income for life - they don't just get 'one-off' payments, they will get a percentage of every payment you make to the financial institution concerned - it will probably be eventually absorbed into the 'operating costs' of the policy/mortgage but they are still getting it. If you go direct, there's still a 'notional' deduction which just disappears into the ether, but at after that, anything you pay to the provider should be 'sans commission'. You may deduce from this that I do not rate the services of IFA's I've encountered over the last 30 years very highly!!

incorrect regarding mortgage business. You will get exactly the same rate and monthly cost going via a broker/IFA as going direct, they may even have access to other products that you don't. No reason not to if you are happy with them last time.

As already stated above, ensure that you try to tie in the product end dates

Beatrix_Kiddo

Thanks to all who have replied - I had not really thought it through properly with regard to making sure the two 'come into sync' as it were - I had mostly been concerned with fixing the rate.

The top up is for for circa £38k, so I suppose I can ride SVR on that for the next year and then bring the two together - I had been thinking of keeping the two seperate with the aim of reducing the top up by overpayments if possible *dry laugh*, but I think it makes more sense to tie the two together after the first loan tie-in period runs out.

Thanks again,

BK.

dwsjarcmcd

payless wrote:

And whilst we don't know the figures / circumstances involved , I know in most "top up" cases I try and ensure the penalty periods are equalised ( ie whilst keeping existing rate - maybe topup with a no tie deal, so you can combine it all into one deal in jan 08 more easily).. might not work out here, but should be explored

I think payless makes a fantastic point. For Banks and building societies this type of split product is a fantastic retention tool that effectively ties you in, unless you pay redemption charges.

You said in your last post that you may be prepared to pay SVR, but you may not need to. A & L may have some products that are a bit more expensive because they don't have redemption charges, but they will still be cheaper than SVR.

I agree with others, if your happy with your IFA, why wouldn't you use him?

payless

Yeah they appear to have a no tie tracker/ discount below SVR- Ok comes with a fee , but savings should be enough to warrant

also avoids the likely larger arr fee on a new fixed

Beatrix_Kiddo

The quote A&L did me for the top up was for a 2 yr fixed at 5.39% fee-free.

Now I have had the very good points of view explained to me on here, I would not be looking for a fixed, however, I don't know - can someone advise me - how much is the fee usually on, for example, the product you mentioned Payless?

Or indeed any similar arr fees for a top up?

Sorry for all the questions

BK