Overwhelmed FTB - thanks in advance!

FTB1234_2

Hello moneysavingexperts

I’m a long-time reader, first-time poster on this board and would really value your sage advice….

Myself and my partner are in the early stages of buying our first flat together. We have a deposit of at least 15% and are looking at properties in the region of £200K, so a total mortgage of between £160-180K, depending on the property.

The number of mortgage options out there is a little overwhelming, to say the least, but we have been doing our research and are confident that we want a 3-year fixed term mortgage.

We have an agreement in principle (“mortgage promise”) with the bank I have banked with all my life, and the deal they have offered is 5.09% with a fee of £995 to be added to the mortgage. This is based on a 85% LTV.

We know this is not the best deal out there by any means, but this particular bank has the advantage of only requiring one month of payslips (my partner has been freelancing at the same company for 18 months but is only now in the process of getting a permanent contract), and I feel a (probably irrational) strange affinity with them and somehow like the neatness of having almost all my dealings with one bank (my partner’s bank requires 3 months of payslips which pushes our hoped-for schedule back a bit).

So, my questions are: is there any benefit to having a mortgage with the same bank as your other accounts? (aside from the fact you get a small discount on their usual interest rates). Are you more likely to be given a mortgage if the majority (not all) of your credit history is with them? Does a 0.5% difference in interest rate (I haven’t seen many 85% LTV/ 3 year fixed term deals offering a lower rate than 4.5%) make a significant enough difference that we should continue to shop around for another lender who only requires 1 month of payslips? And does anyone recommend the best way of finding a (reasonably priced!), unbiased, whole of market mortgage broker?

Many thanks in advance for any suggestions you have,

daisiegg

1 month of payslips? We needed six!

I can't answer any of your questions but did want to say best of luck on your house hunt and the adventure of being a FTB! (which we just went through, completed last Friday...!)

G_M

FTB1234 wrote: »

.....

So, my questions are: is there any benefit to having a mortgage with the same bank as your other accounts? None (aside from the fact you get a small discount on their usual interest rates).
Are you more likely to be given a mortgage if the majority (not all) of your credit history is with them? Maybe but not necessarily
Does a 0.5% difference in interest rate (I haven’t seen many 85% LTV/ 3 year fixed term deals offering a lower rate than 4.5%) make a significant enough difference that we should continue to shop around for another lender who only requires 1 month of payslips? Yes, over time.
And does anyone recommend the best way of finding a (reasonably priced!), unbiased, whole of market mortgage broker?

Many thanks in advance for any suggestions you have,

Most brokers earn off commission, so free to you - but always check.

Use yellow pages or similar, or try FSA here.

Xiderpunk

Why 3yr fixed term? You will be fixing at a rate of 5.09%, which today is quite high, it is a reasonable assumption based on widely held expectations that interest rates are going to remain low for quite some time, very likely for another year or more. A tracker is a better bet over 3yrs as the first year and possibly two years of a fixed rate are wasted with the current climate. Even if in the third year interest rates climb the savings you made in the first year or two should more than offset an interest rate rise.

This is all in my opinion anyway, although perhaps a financial advisor will have a different view.

jahudson72

I second the tracker. I fear you may be falling into that trap of keeping all your eggs in one basket with your money - banks know you do this because it's easier than shopping around. As you're a FTB I would for sure go and see an independant FA as I remember the pain of the first year in my FTB having to buy furniture and spend money on things I never dreamed at, baulking at the cost of council tax and eating beans on toast ha! Seriously though if you already have an agreement in principle you've got nothing to lose by getting another opinion and you could save a lot of money. I second the tracker idea. Good luck

Regina.filangie

Just because your mortgage is with the same bank as your current accounts doesn't necessarily mean it will be any easier - it is a completely separate arm of the bank that deals with mortgages so my advice would be to absolutely consult a broker and look for a better deal elsewhere.
We were offered a 3 year fixed term at 4.99%, no arrangement fee and £250 cashback on completion.
Good luck with your purchase.

FTB1234_2

Thank you very much all. I will take your advice on board and definitely shop around. We're favouring the fixed rate at the beginning for the usual reason that we can budget accurately and won't have any surprises. Cautious, I know, but there's too much other stress associated with all this that I want to know how much will need to be paid each month. Thanks again....