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First time using a mortgage broker, any thoughts?

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Hi All

So basically, house worth 140k. Dad is gifting me a third, so essentially I need mortgage of around 87k. Decent job, have no issues with repayments etc I'm self employed through a limited company so will obviously narrow down the mortgages a bit

Anyway, I used a mortgage broker. decent reviews on google etc They get paid on completion. The nice lady came to me today and said she has found me a deal with santander.

2 yr fixed no fee purchase of 5.69 percent

monthly payments of 544 for first 26 months

then 8.29 percent of remaining

total amount to be repaid is £200k

Now to me, this seems steep. I know these guys know the market better than me, but does this sound expensive?

When I use moneysupermarket, I'm seeing loads of deals for 4.5 initial rate then 7.3 to 7.9 total payable back is around 160-190

what are your guys thoughts? is there anything I'm missing?

Comments

  • ACG
    ACG Posts: 24,538 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    The products at the 4.x are variable rate mortgages by the looks of it. Do you want a variable rate mortgage/are you open to it? 
    Variable means that at the next rate review, they may go up (or come down). 

    You are also making a rookie mistake about the rate. There are cheaper rates with Santander on a 2 year fix, but they come with a fee. The fee makes them more expensive than the higher rate. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • mlc2009
    mlc2009 Posts: 117 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    ACG said:
    The products at the 4.x are variable rate mortgages by the looks of it. Do you want a variable rate mortgage/are you open to it? 
    Variable means that at the next rate review, they may go up (or come down). 

    You are also making a rookie mistake about the rate. There are cheaper rates with Santander on a 2 year fix, but they come with a fee. The fee makes them more expensive than the higher rate. 
    I didn't think about the last bit

    I also didn't think about the variable rate as I don't think BOE is done hiking yet
  • kingstreet
    kingstreet Posts: 39,254 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    You are unlikely ever to pay the follow-on rate so you can safely ignore the total amount repaid. In common with most people, you are likely to move house or mortgage or at the very least take a retention product from your current lender when your first fix ends.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • mlc2009
    mlc2009 Posts: 117 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    You are unlikely ever to pay the follow-on rate so you can safely ignore the total amount repaid. In common with most people, you are likely to move house or mortgage or at the very least take a retention product from your current lender when your first fix ends.
    Thanks for the information, this is my first mortgage so It's all new to me
    So lets say in 2 years time, the rates have been cut, for example lets say they are back to pre-pandemic levels ( thats another discussion entirely whether that happens or not ) will I be able to get a new deal at that current rate?
  • Newbie_John
    Newbie_John Posts: 1,215 Forumite
    1,000 Posts Second Anniversary Name Dropper
    edited 23 June 2023 at 4:00PM
    Yes, 6 months before the end of your 2 years deal you could switch to best available rate provided by your bank for another 2-10 years with just few clicks (product transfer) or switch banks and go through similar process as now (remortgage).

    *you will still need to complete the initial 2 years at the current rate though

    Look at it all as like putting money into a 2 years fixed account, when it ends you can fix for another 2 years and so on.
  • ACG
    ACG Posts: 24,538 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Yes. 

    I bought my house 6 years ago with Virgin money. Since then I have had a kid, my Mrs dropped her hours and on paper we no longer pass affordability with another lender.

    I always have the option with Virgin to keep switching products. They will never be the cheapest, but they are always around 0.5% above the cheapest. That will be similar for a lot of lenders. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • mlc2009
    mlc2009 Posts: 117 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Another question, I'm paying this broker a fee of £500. Is it normal for them to charge you? I always thought the mortgage company pays them
  • jj_43
    jj_43 Posts: 336 Forumite
    100 Posts First Anniversary Name Dropper
    Mortgages are not difficult to understand. Worth spending some time on research to at least verify what your agent is suggesting.
  • ACG
    ACG Posts: 24,538 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    mlc2009 said:
    Another question, I'm paying this broker a fee of £500. Is it normal for them to charge you? I always thought the mortgage company pays them
    We do receive commission. But a lot of brokers do also charge a fee. 
    On £87k, the lender will pay around £280. 

    Unless you are working on pure volume, £280 does not cover:
    Compliance,
    Marketing, 
    Rent,
    Insurance,
    Stationary, 
    Travel,
    IT systems,
    and pay a wage for what might be 10 hours work. 


    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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