Discounted rate with no ERC and low arrangement fees – is this a no-brainer?

gwernybwch

Hi all,

I’ve started to look around for a mortgage to purchase a property, with a max. of 75% LTV.

I’d almost plumped for a 5 year fixed with Yorkshire BS - mainly because I can’t see the interest rates getting only lower (having said that I can’t see them rising much in the next 18 months either, but who knows).

All seemed good until I asked about a potential change of use i.e. what would happen if I needed to move away and rent the house out with a consent to let agreement. At this point, their policy seemed a little sketchy and seemed that there was no guarantee that this would be allowed.

So I’ve started to look for a mortgage with either a short agreement or a low ERC.

I’ve found two products -

Marsden BS –
2.99% discount rate to 31.10.13. £299 – Arrangement fee, £199 – Booking Fee with no ERC.

Market Harborough BS –
2.24% discount rate for 2 years. £500 – Arrangement fee, £95 – admin fee with no ERC.

Are these excellent deals, or am I missing something? Are there any catches to these (particularly around the 'discounted' bit)

Thanks in advance for any replies.

Thrugelmir

gwernybwch wrote: »

All seemed good until I asked about a potential change of use i.e. what would happen if I needed to move away and rent the house out with a consent to let agreement. At this point, their policy seemed a little sketchy and seemed that there was no guarantee that this would be allowed.

You will receive the same response from many lenders. CTL is entirely at the lenders discretion.

shortchanged_2

It depends really what rate they revert to after the discount period is over.

Why are you so keen on a short term deal? Don't forget in around 2 years time when the deal is over you will revert to the SVR I would assume, which could be quite high and you may well need to pay a admin fee again for a new mortgage.

gwernybwch

Thanks for the replies.

Thrugelmir wrote: »

You will receive the same response from many lenders. CTL is entirely at the lenders discretion.

I guess that it was the reaction to the question. Bearing in mind that I have a 25% deposit, I was hoping for a more favourable response. I suppose that I should have questioned the mortgage adviser a bit more as to the criteria that they would use, should I have put in a CTL request.

shortchanged wrote: »

Why are you so keen on a short term deal?

It is really in case things change in my life, such as having to move away to find work. I don’t want to be stuck in the situation that I’ve got a mortgage that is either fixed on a long-term deal or where they won’t agree to a CTL. If I’m a short term deal, I can easily move on.

shortchanged wrote: »

Don't forget in around 2 years time when the deal is over you will revert to the SVR I would assume, which could be quite high and you may well need to pay a admin fee again for a new mortgage.

Am I right in thinking that with a discount mortgage after the 2 year period, I’m under no obligation to continue with the same lender and are free to remortgage with a different lender?