Best Mortgage option?

nikkiandmidgets

Our mortgage advisor has advised that we take out a mortgage with Alliance and Leicester - there is an inital fee and he makes approx £912 in fees - how do we know this is the best deal for us, and not just the best commission rate for him? Do people think the mortage rate will go up or down over next 2 years as its a 2 year fixed rate he has offered us. He is coming to see us later this month and will be looking into getting the valuation fee waived as we have already had the property valued.

Also are these legal fees part of the figure already quoted by our solicitor or an extra? We were hoping to put between an extra £200-£400 into the mortgage every month, but with this one its a annual overpayment we are allowed during the fixed rate period. We will have approx £5500 being paid into our bank acct every month, and will be paying any credit we have off before purchase. Out of this money I pay my mums for childcare as we have two small children and she will be living with us until the kids reach school age, after which we will review the situation.

Details as below:

Mortgage going in husbands name only.

Purchase price £298,000 Mortgage amount £228,000
Fixed rate of 4.79% for 2 years, then stan standard variable rate
Arrangement fee £999
Non refundable valuation fee £430.00
Final Repayment fee £295.00
legal Fees payable to your conveyancer for acting on behalf of the lender £117.50 (The figure quoted is an est. and is only part of the cost of the work. You should ask your conveyancer for details.

Overpayment of 105 of outstanding mortgage can be paid every January.

My husband works all over the world as a service engineer, is dutch and pays UK taxes, and at moment gets paid from UK. Any advice on his tax side is appreciated too!

I'm not saying the mortgage advisor is questionable, its just I've never used one before and we got him via one of these mortgage comparison websites so have no personal experience with him. Neither do we know anyone else that has!

Thanks a lot for any info\advice.

JoeK_3

nikkiandmidgets wrote: »

Our mortgage advisor has advised that we take out a mortgage with Alliance and Leicester - there is an inital fee and he makes approx £912 in fees - how do we know this is the best deal for us, and not just the best commission rate for him? Do people think the mortage rate will go up or down over next 2 years as its a 2 year fixed rate he has offered us. He is coming to see us later this month and will be looking into getting the valuation fee waived as we have already had the property valued.

Also are these legal fees part of the figure already quoted by our solicitor or an extra? We were hoping to put between an extra £200-£400 into the mortgage every month, but with this one its a annual overpayment we are allowed during the fixed rate period. We will have approx £5500 being paid into our bank acct every month, and will be paying any credit we have off before purchase. Out of this money I pay my mums for childcare as we have two small children and she will be living with us until the kids reach school age, after which we will review the situation.

Details as below:

Mortgage going in husbands name only.

Purchase price £298,000 Mortgage amount £228,000
Fixed rate of 4.79% for 2 years, then stan standard variable rate
Arrangement fee £999
Non refundable valuation fee £430.00
Final Repayment fee £295.00
legal Fees payable to your conveyancer for acting on behalf of the lender £117.50 (The figure quoted is an est. and is only part of the cost of the work. You should ask your conveyancer for details.

Overpayment of 105 of outstanding mortgage can be paid every January.

My husband works all over the world as a service engineer, is dutch and pays UK taxes, and at moment gets paid from UK. Any advice on his tax side is appreciated too!

I'm not saying the mortgage advisor is questionable, its just I've never used one before and we got him via one of these mortgage comparison websites so have no personal experience with him. Neither do we know anyone else that has!

Thanks a lot for any info\advice.

It looks a pretty good deal to me and all indicators are that interest rates are on the up! Have you secured this deal? If not it may be to your advantage to make the application asap to ensure that the product is reserved for you before interest rates go up.

Considering rate and fees, you may want to see the following:

A recent article by Helen Loveless of the UK Financial Mail has identified that fee free UK mortgages are in fact costing borrowers more, as they will end up paying more in the end through paying higher interest rates.

An analysis conducted recently in the UK prompted the article, as it identified that fee-free UK mortgage offers are more expensive than deals with an application fee for consumers with a mortgage of £57,000 or more. This is because the interest rate is usually higher. With the average new mortgage loan now at just below £140,000, opting for a fee-free mortgage deal could cost many borrowers dear.

Fee-free UK Mortgages Comparison

Example 1a:
Based on a mortgage of £56,000 and someone taking out a two year fixed rate of 4.47%, they would end up paying £5,005 in interest in the first two years. Add the lenders fees of £1,499 and the overall cost is £6,505

Example 1b:
Again, based on a mortgage of £56,000 and someone taking out a two year fixed rate of 5.35% but fee free, they would end up paying £5,992 in interest in the first two years.

Using the same situation as above but based on the average new UK mortgage of £138,000, the figures work out as follows:

Example 2a:
A borrower taking out a two-year fix at 4.47% and paying fees would pay £13,838 over the two years.

Example 2b:
The same borrower taking out a 5.35% two-year fix and not paying fees, would cost £14,766.

It all goes to show that the bigger the mortgage, the more money you will save by choosing the low-interest option mortgage with a fee, rather than a fee-free UK mortgage deal. From this comparison, you should be aware that fee-free mortgage deals are not what they are cracked up to be.

Using the services of a whole of market UK mortgage broker can pay dividends, as they will do their homework and expose any pitfalls of such mortgage deals.

Once you find one that you like and trust, hold on to them.

JoeK