Mortgage fees

hock79

I thought I understood mortgages, but I'm a bit confused :wall:

My fixed rate deal is up so I'm shopping around for a new deal. We bought the property 4 years ago on a 2yr fix with Northern Rock, we then got another 2 yr fix with them as they were the best at the time so it was all quite a smooth process.

Now, obviously I need to change lenders because NR are only offering their variable rate. I've seen a few that look ok, but the fees can be astronimical - i.e. the cheapest rate I can find is 4.98% with Cheltenham and Gloucester, free valuation and legals, £3108 arrangement fee and £99 booking fee.

If I keep going for 2 year deals, will I have to pay these fees every time? How can people be expected to pay that amount? Does it really cost them £3000 to 'arrange' it all??:mad:

Also, I've done a search on Charcol and came up with some good results, then I got a broker to have a look for me and it doesn't look as promising. Can I try a few differnet brokers? Am I obliged to take out a mortgage with them if I get them to search for me? (I haven't signed anything)

_Andy_

hock79 wrote: »

If I keep going for 2 year deals, will I have to pay these fees every time?

Yes unless you want a fee-free deal

How can people be expected to pay that amount? Does it really cost them £3000 to 'arrange' it all??:mad:

Large fees can be appropriate if the client's main objective is a low monthly payment. Clearly you're not happy with larger fees so I'd suggest looking at a smaller fee mortgage or fee-free.
No it doesn't cost them that much to arrange, probably easiest to think it of as a 'product' fee.

Also, I've done a search on Charcol and came up with some good results, then I got a broker to have a look for me and it doesn't look as promising. Can I try a few differnet brokers? Am I obliged to take out a mortgage with them if I get them to search for me? (I haven't signed anything)

You can try as many as you want but frankly if they're whole of market there isn't a lot of point.

homer_j_3

_Andy_ wrote: »

You can try as many as you want but frankly if they're whole of market there isn't a lot of point.

I disagree with shopping around different brokers just for the sake of it but I feel that just asking if they are whole of market is pointless.

You need to ask if they have access to every lender that will accept broker business and ask for a print out of the lenders that they do research normally to back this up.

mitchaa

hock79 wrote: »

I thought I understood mortgages, but I'm a bit confused :wall:

My fixed rate deal is up so I'm shopping around for a new deal. We bought the property 4 years ago on a 2yr fix with Northern Rock, we then got another 2 yr fix with them as they were the best at the time so it was all quite a smooth process.

Now, obviously I need to change lenders because NR are only offering their variable rate. I've seen a few that look ok, but the fees can be astronimical - i.e. the cheapest rate I can find is 4.98% with Cheltenham and Gloucester, free valuation and legals, £3108 arrangement fee and £99 booking fee.

If I keep going for 2 year deals, will I have to pay these fees every time? How can people be expected to pay that amount? Does it really cost them £3000 to 'arrange' it all??:mad:

The £3207 is basically buying the 4.98% interest rate. Remember the B.O.E base rate is 5.25%. Why would they offer anyone a lower rate without a catch?

Without a product fee buying this rate, you'll probably struggle to get anything under 6% with no fee.

You have to factor in the overall costs too. Split the £3207 down over your chosen fixed rate period to see if it works out better than say a higher rate no fee mortgage.

Over a period of 2yrs i very much doubt it. There is no way i would be paying £3000+ to secure a mortgage when you can get a no fee 1, all be it at a higher rate.

Good luck

dimbo61

why oh why are you looking at a 2 year deal again ? are you going to clear
your mortgage in 2 years NO !! then think long term at least 5 and if you plan to stay a lot longer in this house then maybe even 10 years.
if the fee is higher but spread out over 5 years it may well work out cheaper in the long run.
first direct have good deals but also tight lending criteria
also try YBS which i think have good deals. GOOD LUCK

Conrad

Lenders such as Ipswich Building Society or Cambridge BS have attractive rates with fees of less than £300.

A lot of brokers wont have established relationships with such small lenders, but those who are really interested in actually BROKING MORTGAGES will happily recommend such lenders.

Asking a broker if he's whole of market means nowt. I know plenty who are but they still tend to use the same old lenders such as Abbey and Nationwide disproportionally.

If I go to a lender Ive not used beofe I have to spend time sorting out an agency with them, but then you get what you pay for in this life, and yes I charge small fees to ensure I really can offer independance.

KTF

The lowest rate may not be the 'best' deal when the fee is taken into account. It may be worth looking at a higher rate but with a lower fee. You dont say how much the mortgage is but unless its very large it may not be worth paying the 3K fee.

hock79

Thanks everyone for your advice. The reason I'm going for another 2yr fixed rate is because my personal circumstances mean I don't know how long I'll be here so I don't want to be tied in too long. I'm also the kind of person who needs to know exactly what I'm paying out each month so I think that a 2yr fix is the best option for me.

I'll have a look at the other lenders mentionned, they sound promising. Although I know I need to look at the true cost long term, I find it hard to think beyond the monthly payments as money is quite tight and that is what really counts in the here and now.

mithaa, that helps explain why they charge so much, thanks for that, I will work out the cost over the 2 years when I find out from the broker how much it will be per month once the fees are added to the loan.

Thanks again for your help in explaining this all to me, any other bright suggestions would be appreciated! I just can't believe I'll end up paying about 1.5 x what I paid for the house in interest!

KTF

If you go for a mortgage that is portable you could transfer it if you move house part way through the term.

homer_j_3

but portability is not guaranteed and with the climate changing as it is now, I wouldnt recommend being tied in for longer than you want to on the off chance that you will be allowed to port.