Mortgage/Mortgage fees advice (first time buyer)

afm_2

Hello Everyone,

I am hoping that, once again, you wise people can help with a few questions I have

Here's the deal: we had an offer accepted on a property a few days ago and started the process through our mortgage advisor (one that charges a fee). However, I don't trust him very much for some reason and I think that he made us go with a mortgage that is not the best for us. As we don't understand much about this stuff and we are afraid of doing something wrong, we decided to go with the mortgage he suggested. We know that there are much better rates around and, given that we are putting in a 25% deposit, I thought we would get something better. Every lower rate that I suggest he says that we are not eligible because my husband is the only earner in the house -- even though all of the online affordability checks say that they would lend us enough money. I know that these online checks don't take everything into account and I believe that some of the rates are not availanle for us but, he said some things that make me wary like that we have to trust him because he sees ALL the deals on the market (which he doesn't because first direct and others don't work with brokers) and, when we asked if he was an independent FA he avoided the question.

The application for a mortgage has now been put through but I know that, for instance, first direct offers a better deal with a much lower fee. What I would like to know is if I can still change to first direct and if there's anything wrong with their 3.19% mortgage. So here are my question:

1. When is the mortgage fee payable? When my application is accepted or when the mortage is "activated"?
2. If I have an application for a mortgage accepted is there any problem if I submit an application with another provider? I would like to first get one accepted with a lender that I know will accept me and, only then, try with lenders that may not be so keen in lending us the money (because of the effect on the credit score).
3. Is there anything unusual about the 3.19% deal from first direct or about first direct itself? I need a mortgage that is portable and that allows overpayments --- and that one seems to allow it all. However, it has some rules on the portability bit that I don't understand.
4. Should I try any other lower rates like the ones from building societes?
5. Is it safe for me to arrange all the covers we want? Life, critical illness, and payment protection? Or would you suggest that it is better to leave it for the mortgage advisor?

I know these are too many questions but I have never been in debt before and I want to be sure that I am doing the right thing. I would really appreciate your thoughts!

Thank you!

Dave_Ham

Firstly, you should tell your advisor of these concerns..

If you get to mortgage offer, it is not necessarily good advice to be credit scoring yourself everywhere else but will not cause major harm.

Your Key Facts Illustration and/or customer charter will detail when fees are payable.

First Direct is a great product, not many fit the criteria though. Low income multiples and anything less than perfect on a credit/address file pretty much throws it out.

Also, if this is the in house Estate Agent mortgage broker (and have a feeling it is) then they will not be over helpful arranging a 2nd valuation..

Good luck

ACG

If you dont trust your advisor, dont use them! Your advisor should be putting themselves in your shoes and finding the deal that best suits your needs to the best of his abbility.
Im a whole of market advisor - meaning i dont have access to first direct, Co-op and a few other lenders, however if im asked whether i am independent i answer truthully and tell them so.

If you look on these forums you will see that HSBC and First direct are by far the cheapest deals around, however they have the strictest and strangest criteria by all accounts (have a look on these forums), even if i had access to them im not entirely sure i would use them unless i was confident the case would pass.
But your advisor is earning a bit of money out of you, your giving them all your private info - there should really be trust between yo both.

Anyway...

1. When is the mortgage fee payable? When my application is accepted or when the mortage is "activated"?
Is this the lenders or the brokers fee? It entirely depends on the lender or broker though, your advisor should be explaining this. Some are upfront, some are on completion and some can be added to the loan.

2. If I have an application for a mortgage accepted is there any problem if I submit an application with another provider? I would like to first get one accepted with a lender that I know will accept me and, only then, try with lenders that may not be so keen in lending us the money (because of the effect on the credit score).
There is nothing wrong with that, but bare in mind you may end up paying application fees for it to then only get declined, you might end up holiding up the purchase to the point where the seller accepts another offer etc.

3. Is there anything unusual about the 3.19% deal from first direct or about first direct itself? I need a mortgage that is portable and that allows overpayments --- and that one seems to allow it all. However, it has some rules on the portability bit that I don't understand.
I dont know much about the mortgage as i dont sell it, ive never had to research it but reading the stories on here, it doesnt seem to be the easiest mortgage to get accepted for.

4. Should I try any other lower rates like the ones from building societes?
This is for your advisor to be telling you. Ive said it before on here that if i had clients coming on these forums asking for help, id be thinking maybe i (as an advisor) am not doing a great job. If i was a client and had to get reassurances then i would be thinking hes not the advisor for me.

5. Is it safe for me to arrange all the covers we want? Life, critical illness, and payment protection? Or would you suggest that it is better to leave it for the mortgage advisor?
Personally based on the lack of trust, i would definately be going elsewhere! Just avoid the bank, they can be a lot more expensive that an advisor.

afm_2

Thank you Dave Ham and ACG!



Just checked the KFI and it says "Payable on application" so I think there's no turning back

ACG wrote: »

If you look on these forums you will see that HSBC and First direct are by far the cheapest deals around, however they have the strictest and strangest criteria by all accounts (have a look on these forums), even if i had access to them im not entirely sure i would use them unless i was confident the case would pass.

Ok, so maybe given our current circunstances (me being out of work) we shouldn't even bother with it we know we can pay the mortgage since the monthly payments are lower than our current rent but lenders don't know that.

ACG wrote: »

2. If I have an application for a mortgage accepted is there any problem if I submit an application with another provider? I would like to first get one accepted with a lender that I know will accept me and, only then, try with lenders that may not be so keen in lending us the money (because of the effect on the credit score).
There is nothing wrong with that, but bare in mind you may end up paying application fees for it to then only get declined, you might end up holiding up the purchase to the point where the seller accepts another offer etc.

I wasn't aware that, if a deal was rejected we could still end up paying fees. Thanks for letting me know!

ACG wrote: »

4. Should I try any other lower rates like the ones from building societes?
This is for your advisor to be telling you. Ive said it before on here that if i had clients coming on these forums asking for help, id be thinking maybe i (as an advisor) am not doing a great job. If i was a client and had to get reassurances then i would be thinking hes not the advisor for me.

He says we are not elegible. Should I trust the online affordability checks? They say otherwise.

ACG wrote: »

5. Is it safe for me to arrange all the covers we want? Life, critical illness, and payment protection? Or would you suggest that it is better to leave it for the mortgage advisor?
Personally based on the lack of trust, i would definately be going elsewhere! Just avoid the bank, they can be a lot more expensive that an advisor.

Do I need a degree to do it? He insists that the online deals do not cover much. Do I have to take anything in particular into account? Or is it basically as straightforward as car insurance?

Thanks for all the advice!

ACG

It doesnt mean you will or wont get accepted just because your out of work, it depends entirely on yourself. If you have a mortgage in place through yoru advisor then there is nothing stopping you trying elsewhere but for me personally i like the easy life so id just go with whatever he has done.

Not all lenders charge upfront fees - some do, some dont so its a case of checking beforehand.

Based on your posts...i wouldnt trust him as far as i could throw him - but i dont know him. Ask him if he is prepared to put what he is saying in writing - see how much he believes what he is telling you, i bet he will refuse.

Life, Critical Illness, Income Protection - you dont need a degree to get cover. You can get it online, some places its a stripped down version (tescos for example im sure is a lower quality contract despite being backed by one of the biggest insurers, for a higher premium), others will give you the exact same policy as you would get from an advisor.
However, ensuring its the right cover (ie it pays out what you expect it to when you expect it) is the harder part.
There is a thread on the insurance part, someone thought they were going to get sick pay while they were off work - all they had was terminal illness cover which never paid out. I would suggest you see a broker you like and more importantly trust is acting in your best interests - very few advisors charge for protection business because the commission is quite good.

afm_2

ACG wrote: »

I would suggest you see a broker you like and more importantly trust is acting in your best interests - very few advisors charge for protection business because the commission is quite good.

But isn't their comission included in the premium they get me (in the sense that I'll have to pay more for the monthy premium than if I did it myself)? For life insurance + critical illness for both of us and payment protection for my husband, on a 30 years mortgage, he is quoting us £100 a month. Does that sound right?

Thanks again and sorry for all the questions but you're being very helpful!

ACG

It is yes, but the premium isnt that much extra, i dont have many examples but one where i waived 20% of the commission made the premium around 50p a month less - so if i had waived all my commission they would have saved about £2.50 a month.

I cant tell you if £100 is expensive or not it depends on a lot of different things.
Age, smokers, health, occupation, amount of cover, length of cover among other things.

afm_2

Ok! Thanks for your time and patience

Conrad

ACG wrote: »

so if i had waived all my commission they would have saved about £2.50 a month.

I as a matter of course re - imburse 30 or 50% commision and it can make quite a difference to the premium on a death and critic all illness policy.

Be sure you answer every question in the health application fully and double check them in your own time. Some advisers hungry for commision dont give full and frank health / occupation / hieght n weight etc as they dont want the policy refuced / increased. Personally I'd do it direct to the insurer if I were you.

ACG

I only waive commission if i think i have earnt enough for the job i have done for them.
The alternative is i would pay for their will to be thrown in free of charge or some other good will gesture they they would appreciate - i certainly dont do it as a matter of course.

As an advisor your suggesting people go direct? So the OP follows your suggestion - probably wont use a trust and may not take out the cover theyre expecting. There is a thread in the insurance section where someone took a policy out expecting to receive an income if they were ill and they didnt (an advised sale i believe)...part of an advisors job is to work out what they want and need to be covered for get the policy and explain how it will do what they want.

Im not saying the OP isnt able to do this, im sure they are but mistakes are made by individuals as well as advisors - atleast if its done by an advisor you have the FSCS/FOS to fall back on, you dont if you do it yoruself.

Sorry for the poor spelling, i never took my charger to the office this morning so was writing that before my battery went.