help please don't know what's best

sparklewing

buying a house for 116000 it's valued at 120000 so that's fine. We have a 5% deposit

It's ex council with tin roof which has proved a problem getting a mortgage but our broker says both Lloyds and Halifax have said they will lend for this type of property.

We want a fixed rate paying interest only for first couple of years then going to repayment.

I currently have a mortgage with halifax early repayment charges will be £1800

Broker is pushing a 2 year with lloyds at 6.69% £699 set up cost and the ERC from halifax of 1800

I suggested to him we go with the 10 year fixed with halifax at 6.29% and they wont charge us ERC or set up fee.

He still says lloyds are better but I just can't see how except for it being a shorter term but I'd rather the lower payments than the freedom to move after 2 years.

What would you do? Is he just pushing Lloyds because if we stay with halifax we'll probably just apply ourselves therefore he loses out on comission?

apk1

I would have thought if Halifax will do you should stay with them unless the Lloyds (c&g ?) deal is good enough to save you the erc. You should question your broker and ask him to proove the lloyds deal is better, there is no reason why he should'nt apply through Halifax for you.

Griptool

Please be aware your brokers advise is to benefit him financially not you, do not take what he says at face value.

IMO I can't see the lending conditions easing in the near future - If you think the house will retain its value in the current downturn and you can afford the payments (please consider unforeseen circumstances)take out as long a fixed rate loan as you can.

Many people will be coming off cheap two year fixed rates in the next few months and will not be able to re mortgage at affordable levels.

Kiernan809

We want a fixed rate paying interest only for first couple of years then going to repayment.

This will incur a healthy charge if you have 8 years left on your fixed rate.

Assuming the best of your advisers intentions then IO for 10 years is a danger situation unless you plan to run a savings vehicle for this time period.

Although he is the adviser so if he thinks Lloyds are a better option then have him explain why. If he runs the new ERC excuse above then ask how much will be saved over 2/10 years by taking the halifax rate (£600/year looks likely).

Ask for illustrations for both so that you can better make your decision and have a look at the commission earned for yourself.

apk1

Kiernan809 wrote: »

This will incur a healthy charge if you have 8 years left on your fixed rate.

.

You should be able to change the method of repayment without incurring any penalty charges.