UKH

Me and my girlfriend are seeing a mortgage advisor tomorrow and while I'm fairy confident in holding my own in conversations on sport, science, world affairs, politics etc I know nothing about money and finance.

I Don't really understand interest rates, I don't use credit and basically budget on the basis that at the end of the month I have money left over and can a ski holiday each year

So my query is:
What questions should I be asking this guy? What do I need to know/understand?
How do I know this guy is any good? He has been recommended by a friend, but other than that.... i feel its a bit like travel insurance, you only know how good they are when you claim. Mortgage advice really only comes good x number of years down the line I suppose

In reply to idiotproof (Buxton MC):
For starters:

How much will I pay per month?
Is that amount fixed or does it vary?
At the end of the "fixed term" it will vary. How much might I be paying then, even if interest rates generally go up?
If I want to sell the house before the end of the "fixed term", what is the financial penalty?
How much are the fees to take out the mortgage?
Can I overpay if I have extra money (to get rid of the mortgage early)? Are there any penalties in doing so? If I overpay, can I withdraw that money out of the mortgage in later months/years (some have this facility, some don't)

Edit: the general principle you need to be happy with is this: If interest rates go up across the board, will I still be able to pay the mortgage?

In reply to idiotproof (Buxton MC):

Just the costs involved, what happens when the rate they offer ends, the rates.. you'll also need insurance on top of that, but some require a fairly large set up fee for the mortgage..

It's not rocket science really, at a young age I think its better to be safe and fix at what you know you can afford. You could opt for a flexi rate but if it rose a lot suddenly then you may not be able to pay the mortgage.. I'm not in the UK so I don't know how likely that is. We fixed at 4% or so, and rates dropped lower, but at the time the economy was all over the show and we knew 4% was very manageable.. but a 6-8% rate would have hurt..

A fixed rate means you can budget much more confidently.. Also depends on job security though as well.. Right now a tracker is attractive and probably cheaper but you also tend to need a sizeable deposit.

Its pretty depressing at first how little you pay off..

I'd go in there with a good idea of the deposit you have and the price/month you can afford..

In reply to idiotproof (Buxton MC):
recently went through the process and knew nothing about it! the mortgage advisor explained everything- its really their job to make sure it makes sense to you and you understand the numbers and implications of what they're essentially selling you. if you don't understand then ask, its their job to know the answers and help you!

In reply to idiotproof (Buxton MC):

If you're not happy with the advice you receive try Stan Sherlock in Carlisle - I've had three mortgages from them and they've been excellent - I've also put other people in touch with them and they've all had excellent service and advice.

In reply to idiotproof (Buxton MC): you may have heard of this guy (Martin Lewis)-as far as i can see he offers expert independent advice, so this should be worth a read-

http://www.moneysavingexpert.com/mortgages/

The only other thing is under no circumstances go for anything other than a straightforward repayment mortgage-if this bloke (and I assume he is an Independent Financial Advisor?-if not, get one) tries to talk you into an endowment mortgage run a mile.

In reply to idiotproof (Buxton MC):

Is there an early redemption charge/fee? If so how much?

Do you have to use the lender's "in house" valuer/surveyor or can you use one of your choice if he/she is on their panel? Independant panel valuers are often less expensive and know the area better than in house surveyors who cover a big area under pressure to get a fast turn around and won't have the same local knowledge. Lenders make a lot of money by insisting that only their in house surveyor can do the mortgage valuation.

In reply to idiotproof (Buxton MC):

Ask him if he is whole market, if he's not he will only be able to offer products from those lenders he deals with.

In reply to idiotproof (Buxton MC):
Buy a couple of broadsheet newspapers for the best deals in the personal finance section to see how they compare with what the adviser suggests. Buy a couple of mortgae/house buying magazines too.

Play around with a calculator such as https://www.google.co.uk/compare/mortgage to see what difference interest rate & term make.

If you have large deposit you get a very good interest rate.

All the multitude of fixed rates, discount rates, arrangement fees seem to add up the the same official APR.
That's because the lender wants a certain rate of return regardless of how they lend it to you and you represent a certain level of risk. Hence the different options are just the same loan packaged differently so the official APR calculation that includes all the costs and fees varies little.

In reply to elsewhere:

Whole of market is important.

Assuming you take out a repayment mortgage and you overpay, can you then, if needed, reduce / freeze or convert to interest only for a short period: helpful if suddenly you find yourself out of work and unable to repay.

They cannot insist you take out either life or buildings / contents insurance with the company that provides the mortgage. If they do, then they're lying. They may try to sell you these things as it is likely they will be working to some kind of target. Do you or your girlfriend have any life insurance already, such as through your employment?

For a freehold property, you will need buildings insurance but shop around.
You do not need life insurance to get the mortgage.

The mortgage should be transferrable, i.e. you could move house and not need to get a new mortgage: read http://www.moneysupermarket.com/c/news/beware-the-portable-mortgage-trap/00...

In reply to Flinticus:
What Flinticus says above assumes you're planning on buying a house. For a flat, you still need buildings insurance, but for a leasehold flat it would be sorted out by the freeholder (and they send you a bill once a year) and for share of freehold there'll be other arrangements but it's essentially the same idea. (I don't have any experience of share of freehold.)

In reply to idiotproof (Buxton MC):

Find out about the Solicitor that will be involved. if you are going through the Mortgage Advisor for the house search and purchase they normally recommend a firm associated with the their company. I would recommend turning this down and finding your own solicitor. Make it one that is right next to your workplace. Once the process begins and you're asking yourself, as always happens -

"what's taking so long with the Solicitors and the paperwork, credit checks etc?"

it's much easier if your can drop in to their office and see them face to face. That way they can't fob you off with excuses over the phone. It really makes a massive difference.

In reply to idiotproof (Buxton MC):

Thanks, I think we are looking at house in the ballpark £120-140k range and have a deposit of £55k. Looks like I will spend the night reading moneysavingexpert.com.

I may be back after seeing them tomorrow

In reply to idiotproof (Buxton MC):

I'd try HSBC with that sort of deposit.

In reply to Wise:

A man in the pub was overheard to say HSBC used to have favourable rates but insisted that you used their choice of conveyancers who may or may not have been a bucket shop call centre with a reputation of sorts. Allegedly.
YMMV

In reply to idiotproof (Buxton MC):

If you have/will have savings, consider having an Offset mortgage which means your savings can be connected to your mortgage account and used to offset the amount that interest is charged on. e.g. if you have £10 000 savings and a mortgage of £100 000 you would only be charged interest on £90 000. There are ways of using this to your own advantage, feel free to question me on this if you go down that route.

In reply to idiotproof (Buxton MC):
Another vote for HSBC, they've been offering 2.4% ish variable when you have a big deposit like that.
That deal has been consistently in the newspaper best buys for a few years.

In reply to idiotproof (Buxton MC):

55k!? Bloody hell

I've just had a mortgage advisor over to get the ball rolling this evening. I only have a measily 5% deposit, but the advisor seemed confident that the AIP would go through fine tomorrow morning.

Good luck!

In reply to LittleJoe:

Yes but you're 25 ...

In reply to Skyfall:

not 25 anymore

In reply to cuppatea:


Not really any such thing. For example HSBC don't sell through brokers, there's "exclusives" only available to certain networks/clubs/firms.

Lots of good advice here, but also ask how much they'll charge you - pretty much all brokers charge an advice fee as well as getting commission on the mortgage and any protection sales (the life cover etc is by far the biggest earner for them).

In reply to idiotproof (Buxton MC):

With a hefty % deposit, and assuming 2 incomes, I'd definitely be asking about shorter term mortgages, 20 years (or lower).

In reply to idiotproof (Buxton MC):

I would suggest looking round for yourself as well. I have an offset mortgage with first direct, so instead of getting interest on my savings, I save interest on my mortgage. I also can over and underpay, which is good, if you overpay you will save money by paying off early. Their customer service is good too, when I was struggling with life they were so nice to me and so helpful.

In reply to andy:

Thanks for clarifying.

I had advice from a chap who called himself whole of market, he later gave my sister advice but steered her towards HSBC who offered a product that he couldn't.
I found this
http://www.morechoicemortgagecentre.co.uk/more-choice.php?id=11
which helped explain it, as there are others confused by it

In reply to idiotproof (Buxton MC):

Its now two days after tomorrow. Did it go OK?

In reply to idiotproof (Buxton MC):

with that much deposit you might be able to get a 'buy to let' option on your mortgage - worth having should you be considering going off travelling for a while.

In reply to Flinticus:
Well the meeting in person was cancelled due to snow but we had a telephone meeting. We have made an application for a mortgage in principle and that has all been OK'd and doesn't tie us into him or the Halifax (apparently he uses those as it doesn't show up in credit checks if we decide not to progress).

He is independent and said that with our deposit and borrowing 90k should have repayments of £400-450 over 25 years but suggests when we come to the 'proper mortgage' that

In reply to idiotproof (Buxton MC):
Not sure what happened to end of that post... we will consider shorter terms.

Things have moved quick as we have put in offers on a house. Asking price is 145k and we are on 3rd offer of 142.5k and waiting for reply.