First Time Buyer Questions

LJE091

Hi all,

My fiance and I have been saving for a deposit, we're nearly at our target. My question is, when is the right time to contact a mortgage broker? - should we have done this already? Should we wait until we have the full deposit ready?

Also how much roughly should we set aside for any fees during the process? By that I mean fees that are required a long the way, rather than ones that can be added onto the mortgage.

Thanks in advance

ACG

It depends on how far away you are, I remember once speaking to someone 2 years before they were ready...I was massively surprised when they called me 2 years down the line. I also speak to a lot of people 3 weeks after their offer on a property was made and they have been declined by their first choice lender.

I prefer it when people call in advance, at least then you do not have to drop everything and it is a lot less stressful.

In terms of fees it will depend on the purchase price but assuming a £100-250k purchase price:
Solicitors (including searches) around £800-1000.
Stamp duty - 2% of the purchase price on anything over £125k.
Valuation fee - £0-450.
Broker fee - £0-500

jlaw4

I've already spent £300 in searches (part of my solicitor fees but is retained at start of process)
£529 for a building survey (independent as I wanted my own)
£0 broker fee but was quoted £195 upfront by 2 different ones.
I had never budgeted for a survey as I wasnt intending on having this done and i didnt know the solicitors wanted a deposit of that amount!

FIRSTTIMER

The order of work should be....


Instruct Solicitor but don't proceed with searches and pay them a deposit
Obtain Mortgage and instruct valuation/surveys
Once this is all sorted then instruct solicitor to proceed with searches etc


Also - I don't see ANY point going through a broker for a mortgage - deal with lenders direct is always best. Brokers tend to go down the road of either selecting lenders who will accept dodgy clients/minimal evidence needed/borderline cases OR they choose lenders that give most commission. If they do neither of these and are very good brokers and just charge a set fee - why bother? Just search online for the best deal yourself.

ACG

Dealing with lenders directly is rarely best.
I can say that as someone that has worked for 2 banks.

Brokers are not interested in the commission rates. The difference between the highest and lowest is so low it is not worth worrying about. Especially when you consider if we were found to be using only the lenders who paid the msot we risk losing our livelihoods for the sake of say £50 there is one hell of a risk.

I do mostly deal with people who have adverse as that the part of the market I find the most interesting but even those who have no issues can have applications turn in to a nightmare and/or get declined. Brokers are not a price comparison site, we are service providers, we deal with the lender and agent, we fix problems and guide applicants to the best deals for their circumstances. Most people at outset say they want the cheapest, but actually when we discuss the options, it is very rarely the cheapest rate they want.

It makes no difference to me whether people are for or against brokers in the main but to say going direct is best is wrong (in my opinion).

FIRSTTIMER

Ok point taken - but its like anything the middle man is never needed.


Do we really need to pay 5k to an estate agent when you can sell directly and advertise urself
Do you really need to take out car finance and pay an extra 3k when if you go direct to bank and get a loan and take cash to buy the car you end up only paying 1k in interest instead.
Do you really need to go to a salon to buy a product that has been marked up by 10 quid when you can just go online and buy direct from supplier at half the price.


I could go on...

Lazos

Sorry but getting a loan to buy a car IS going to a middle man...

FIRSTTIMER

as is getting a mortgage but u go to right middle man

ACG

Buying a house is a little more complex than buying shampoo.
You could argue everything has a middle man, I dont go to kelloggs to go and buy my cereal.

You might also find you end up saving money even after paying a broker fee.
1) We have exclusive deals with some lenders.
2) If you plan to take out life insurance/income protection etc you will probably find a broker is cheaper than a bank.
3) I have often saved people money by using my contacts for solicitors/surveyors etc (and no I do not get any kick backs from my solicitors).
4) When clients read reports, sometimes it scares them to the point of wanting more reports or pulling out, but with a quick chat we can help straighten things out and avoid the need for that.

Brokers are not for everyone and I completely accept that. I rarely say anyone needs a broker, but we do have our uses. In the same way I do not need a carpet fitter, but they are worth their weight in gold.

LJE091

Thank you ACG.

I'd say we're about 4 months away from being ready. I didn't want to risk leaving it too late. It would be frustrating if when we were ready with our deposit we were too far behind in the process and miss out on a house.

LJE091

FIRSTTIMER wrote: »

Also - I don't see ANY point going through a broker for a mortgage - deal with lenders direct is always best. Brokers tend to go down the road of either selecting lenders who will accept dodgy clients/minimal evidence needed/borderline cases OR they choose lenders that give most commission. If they do neither of these and are very good brokers and just charge a set fee - why bother? Just search online for the best deal yourself.

If you're confident you know what you're doing when it comes to mortgages then I can understand your point.
However, having never been through the process before and after speaking to friends & family we've made the decision to go ahead and use a mortgage broker. Guidance in what is a very complicated process (to us) will hopefully be worth every penny!