Mortgages. Cheap dodgy chap off the internet or big national bank?

Discussion in 'Finance, Property, Law' started by Ravers, Nov 21, 2011.

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  1. Ravers

    Ravers LE Reviewer Book Reviewer

    I'm looking at renting out my flat and taking out a bit of wedge against a third of it's value in order to buy some cool shit. I'm currently looking around for buy to let mortgages and residential mortgages with a consent to let clause.

    I'm amazed at the huge variation in price for basically the same product.

    Thus far for a fixed rate 5 year deal (interest only), I've been quoted nearly £800 a month by Natwest or £420 a month by some broker off the internet.

    So what's the score? Why the massive variation? What's the risk of going with a small broker? What are the benefits of going with Natwest, HSBC, Lloyds, Barclays etc?

    Confused of Cheam.
  2. Thats a big difference in an interest only mortgage what rates are they both offering on how much.

    Be very wary of the fees independent brokers charge, this can sometimes be alot more than the banks charge.
  3. Ravers

    Ravers LE Reviewer Book Reviewer

    I did notice that wanted a 500 quid arrangement fee, but to be honest I'd happily swallow this given that I'd be paying nearly £400 a month less than Natwest.
  4. What are the rates? And how much are you borrowing? It must be a bloody good mortgage if thay are offering half the interest rate of Natwest.
  5. I've just had a look at Natwest site and the best mortgage I can see for 5 years (40% deposit) is 3.79% (although I don't know if its interest only)

    If another company is offering slightly over half of this, its asking for about 2%. Have you made a mistake anywhere because that would be a very, very good deal.
  6. Ravers

    Ravers LE Reviewer Book Reviewer

    2.45% fixed rate, this is for 2 years though not 5.
  7. Sounds very good, have you got a link? Check their product fee (seperate from advisors fees)
    Also if you can get a residential mortgage (its normally cheaper) and then 6 months later tell the bank you have taken a tenent to help meet the costs. The banks generally dont give a **** so long as they are getting their cash. (I got that advice from a mortgage advisor at TSB).
  8. I just did a quick google and found a Building society offering a two year at 2.59% with LTV 75%
    Total fees 1140 quid, (Thats arrangement, completion and exit fee)

    2 Year Fixed Rate Mortgages
  9. Ravers

    Ravers LE Reviewer Book Reviewer

    No linky to the deal I was offered I'm afraid, done over the phone, but I think it's this lot: Best Remortgages Deals, Fixed Rate Mortgages, Brokers, Remortgage Offers Company, House, Search, Mortgage Payment Calculator UK | Sensible Mortgage Solutions

    It's a residential mortgage with a consent to let clause, which basically means I'll live there for a month and then get a tenent.

    I'm seriously tempted by the good price and there doesn't appear to be any downside or catch, just wondering if anyone else would trust an unheard of bunch of Northerners with a third of their home? Will Jim Davidson come round a break my kneecaps if I miss a payment for instance?
  10. Check the small print, the fees can include (and are not limited to) the arrangement fee of the broker which you have already said is 500 notes to the arrangement of the bank (Not always the same as the broker), completion and exit fee, some also charge for a valuation. And missed payments can be drastically charged (some banks offer a payment holiday)
    A lot of people make the mistake of going for the cheaper percentage rate but pay a massive amount of fees (This normally only works out cheaper if you are borrowing a lot)
    Natwest are offering a 3.25% (With restictions) on a LTV of 70% but no product fee.
    You need to work out if paying 2.45 + fees is cheaper than paying 3.25 with no (or little) fees.
  11. Have you been in touch with MDN? He's clued up on all this mullarky.
  12. The low interest deal looks very good to me. Is the organisation offering it authorised and regulated by the Financial Services Authority?

    If not, be wary. Also think about what will happen in over 2 years time and what the interest rates may be then.

    And, is the rate you were quoted the flat rate, or the rate over the bank (of England) interest rate. If the latter, you could find yourself paying a lot more in 3 years time when interest rates start moving again.

    How about early repayment penalties? Something to watch for! Example, if interest rates did go up and you wanted out, the penalties may be stiff.

    Hope this is helpful.

  13. Ravers

    Ravers LE Reviewer Book Reviewer

    Okey dokey, it's making a bit more sense now, I'll see what hidden fees they have and base the decision on that. My head is still telling me to go with one of the big four, at least if I have any snags with anything, I can walk down the highstreet and have a chat with a real person.

    Hmmmm next decision, what to spend the money on?

    Anyone on here selling a jet ski?
  14. Correct, to give you a very basic example using very basic figures.
    If you borrow 100k at 2.5% over two years interest only and pay 3k total fees, you will pay 8k in total.
    If you borrow 100k at 3.5% over two years interest only and pay 500 quid in total fees you will pay 7.5k in total.

    So even though the second example has an interest rate that is 1% more its still cheaper.

    There is nothing wrong with going with someone other than the high street names, you just need to realise what the true costs are.
    There is loan company (who's name I cant remember) on the net offering loans better than the big four (Up to 15k only).
  15. Ravers,

    Best solid advise I can offer is get in touch with a couple of LOCAL IFA's, find them from different firms, and get them round to yours for a chat. They quite often are affiliated to different mortgage lenders and you will get a better understanding of what is on offer, fees, exit fees etc.

    I would not trust an over the phone quote until you have seen all paperwork, checked the small print etc. An IFA will do their best to get what you need.

    Good luck and let us know how you get on.