Mortgage with significant childcare costs

anticlaus105

I am about to apply for a mortgage with my wife. The problem is we are very limited to which lender we can use due to childcare costs for 2 children of around £1.5k per month. These will end for one child in Sep 16. We have income of 22k and 37k and a 25-30% (can stretch to 30% if needed) deposit on 230k house. We pay £700pm rent atm. No car finance/credit card balances.


Our broker is steering us towards Natwest who offer a 2 year fix at around 1.88% / £995 fee. When googling I can see much better rates available e.g. 1.19% but I assume these lenders wont touch us hence the push to Natwest.


Are there any other lenders that would consider us who will offer a better deal?


I was originally looking at 5 yr fix but this is 2.83% (Natwest) and running the calcs the 2 year fix has £1258 less outstanding after 2 years with £80pm less paid.


At this time we not have childcare costs so will hopefully be able to remortgage onto a much better rate, and ultimately save, assuming rates don't rise significantly.


Can anyone offer any thoughts or input please?

mariecc_2

I can't help you with a mortgage but my experience FA's they will do what is best for them they are there to make money for their wages..... Have you drawm up a short list of high st places booked a short appointment to ask if they a mortgage for ( not an application appointment) just enquiry of what would be required.... I have never paid fees for a mortgage my recent one cost me £35 for transfer of funds... make sure you devide the product fee over the term ie 2 yr fixed 995/24= £41.45 then add this to your 1.88% . or ask your FA what the assumed rate then is ( say 2.2%) then look at mortgage without fees what are their rates... As all advice off Martin he says use sites, use the net but I also say use your own feet and brains too. I was originally going to go for a first direct 7 years ago until I worked out what the £2000 fee would be each month... it ended up dearer per month with their low mortgage... and when you come to remortgage if you do,,, you have to find more money again for a product fee, so you also have to put away another £45 per month for that straight away your paying £90 per before your mortgage cost.. have another look about if you have time.

amnblog

Your broker will have selected your lender and product based on your circumstances.

Note the order Lender, then product. Rates of 1.19% can only ever be suitable for those that would be offered them by the Lender. As you would expect, the keener the rate, the more demand the Lender has and the tighter there are on criteria for borrowers.

I really don't know where to start with Marie's post. It am afraid it does not reflect the realities of the market and is unhelpful on many levels. If your broker was doing 'what is best for them' I am not sure how they would achieve that by using NatWest.

anticlaus105

Thanks for the useful input so far.


Natwest do a fee free product that has a rate of 2.48%. Payments would be ~£50pm more but after 2 years the outstanding balance would be less than £150 less than the 1.88% deal. In this case it would be better to pay the fee. This is with the fee added onto the mortgage.

ACG

Marie, I think you are either paranoid or very misguided. To give you an example, most lenders pay commission in the region of 0.3% - 0.35% of the mortgage. So on a £100,000 mortgage, that would be between £300 and £350 and thats before compliance costs and the tax man takes their cut.

Do you think in a heavily regulated world where if we are found to be picking lenders who pay the most commission we would risk losing our license over something so minor?

The lenders you have found, have you gone on their affordability calculators and put in the figures? Its all well and good their being better deals but if the lender will not lend to you or not lend what you need then they are not much use.