mortgage fees

Iwanttobeatree

hi my finicial adviser guy says all mortgages come with product fees? should i trust him? im seeing ones without product fees listed online hmmm.

what mortgage would be good to go for with £18k deposit to put down and borrowing £24k?

early repayment as optional would be good.

clueless about mortgages thanks for any basic or complex help

ACG

Most do have fees, not ALL though.
Some will charge a fee and then offer cashback on completion.

Depending on the deposit, some will allow you add the fee to the mortgage so your not paying it upfront - that adds about £2-3 a month to the repayments.

Pros and cons of each but i tend to find if you pay fees and add it to the loan its cheaper than if there are no fees as all.

Iwanttobeatree

ACG wrote: »

Pros and cons of each but i tend to find if you pay fees and add it to the loan its cheaper than if there are no fees as all.

i assume because the ones with fees have less percentages.

what would be a good percentage for a mortgage with the figures i talked about please?

opinions4u

Iwanttobeatree wrote: »

hi my finicial adviser guy says all mortgages come with product fees? should i trust him? im seeing ones without product fees listed online hmmm.

Some have fees, some don't. As a rule of thumb, the higher the fee, the lower the rate.

what mortgage would be good to go for with £18k deposit to put down and borrowing £24k?

Here you have a problem. Most lenders have a minimum property value and a minimum loan amount. A £24k loan on a £42k property narrows you down to a select band of lenders. It's more than possible that the deals you qualify for all have fees.

ACG

To give you an example i put in the figures you gave

£42k property with an £18k deposit...
The lowest interest rate was 2.59% but that came with a £999 fee.
the next was 2.60% with £999 fee.
The next was 2.69% with a £699 fee.
Next was 2.75% with a £299 fee.

But when you add the fee to the loan the last is coming out with the cheapest monthly payments. There are a few other deals in the search but it gives you an idea of how paying a fee can actually make it cheaper.

but those figures are just basic they dont take into account your circumstances or what type of deal you are after etc, so dont take this as advice its just a rough idea.

Opinions4u makes a good point.

Your best speaking to your advisor about your thoughts. As an advisor id prefer my client to come back to me personally. The idea is that they discuss your needs and meet them where possible or find something that will be as close as possible to what you want. If you dont feel like you can talk to them then look for another advisor maybe?

Iwanttobeatree

ACG wrote: »

To give you an example i put in the figures you gave

£42k property with an £18k deposit...
The lowest interest rate was 2.59% but that came with a £999 fee.
the next was 2.60% with £999 fee.
The next was 2.69% with a £699 fee.
Next was 2.75% with a £299 fee.

But when you add the fee to the loan the last is coming out with the cheapest monthly payments. There are a few other deals in the search but it gives you an idea of how paying a fee can actually make it cheaper.

but those figures are just basic they dont take into account your circumstances or what type of deal you are after etc, so dont take this as advice its just a rough idea.

Opinions4u makes a good point.

Your best speaking to your advisor about your thoughts. As an advisor id prefer my client to come back to me personally. The idea is that they discuss your needs and meet them where possible or find something that will be as close as possible to what you want. If you dont feel like you can talk to them then look for another advisor maybe?

wow thats excellent rough guide cheers, just what i needed, and very low percentages! where did you get those calculations from could you give me a link? or if thats not allowed PM me?

bigadaj

I believe, as previously stated, that it may be harder to obtain a smaller mortgage so in this circumstance it may be worth looking at a mortgage of Say £30000 as well. Loading the fee onto the mortgage means that you will be paying admittedly low interest over the whole term so a large amount of interest. With a small mortgage then any fee is proportionately a large percentage so low fee is generally better. If you do go to a broker then determine what his fee is at an early stage, as again this may be a high percentage of a low mortgage sum.

ACG

I cant give you a link, we have software that we use (your advisor will have something similar) to obtain quotes.

kingstreet

On this type of case, not only is avoiding arrangement fees best, getting free valuation and cashback is very important.

As an example, you can choose;-

A 3.44% tracker. No arrangement fee, no valuation fee and £250 cashback. £35 telegraphic fee applies, as does £225 "final fee".

If you use a simple method of working out the costs over the two years, the monthly payments equal £119.38, so that means £2,865 in total payments. Deducting the cashback and adding the two fees means your overall outlay is £2,875.

If we use ACG's 2.75% deal as our comparison by finding the best option out of those available at that rate, you'll have a rate of 2.75% but have to pay arrangement and booking fees of £374. There's no valuation fee or telegraphic transfer fee, but the closing fee is £100 in total.

If we do the same to this deal we have £110.71 monthly, or £2,657 over two years, plus the arrangement and final fees mean a total outlay of £3,131.

So a rate of 3.44% beats a deal at 2.75% by £256 over two years because of the negative impact of fees and the positive impact of a cashback.

I based these comparisons on £24k on £42k over 25 years on repayment. You also need to take into account the follow on rate and the rate at which capital is repaid in establishing the best overall deal. My objective in this comparison was to highlight the fee v rate issue only.