Which mortgage package should I choose?

G

gebbel

Registered User
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Re: Best Value Tracker Mortgage Rates (more than 60% LTV)

Hi all,

Have just agreed to buy a 2 bed Apartment for 267,000 Euro in Drogheda. Am now in the process of getting a mortgage. I am using a broker I found on the internet (reputable, i believe), in this regard. I met with their consultant yesterday. The choices are a bit confusing. I am inclined to go for a 95% mortgage (even though I could raise enough of a deposit to only need a 92% mortgage, however this would leave me with nothing for the "rainy day".
Any advice from anyone? Would I be crazy to choose a 95% and remain financially "comfortable" or go for it, and put all disposable cash into getting a 92% version? What are the things I should consider? This is unchartered territory for me, and I am slightly worried I will get unsound advice from the broker.
 
Why are you worried about the advice you are getting from the broker?

If you are borrowing on a variable or tracker mortgage rate you can repay a lump sum whenever you wish without penalty so there's no 'risk' with taking a 95% mortgage (or 93/94%).

Sarah

www.rea.ie
 
If you choose the 95% option you will still have money to do any necessary fit outs on the appartment that you may wish to do.
 
Sarah W said:
Why are you worried about the advice you are getting from the broker?

If you are borrowing on a variable or tracker mortgage rate you can repay a lump sum whenever you wish without penalty so there's no 'risk' with taking a 95% mortgage (or 93/94%).

Sarah

www.rea.ie
Click to expand...

Sorry, this may sound silly but I was thinking that the Broker could have a vested interest in me choosing a 95% mortgage over a 92% one, (in terms of commission paid etc.) as surely a financial institution will make more profit for a longer repayment time.
 
I can understand why you think that but you're wrong. The maximum commission paid is based on a percentage of the loan amount, the term is irrelevant. If the broker is producing enough business and is spreading it reasonably equally between the lenders he/she has agencies with the commission will be 1% of the loan amount across the board with the exception of Bank of Scotland who pay 0.9%. There should be no reason why your broker can not tell you who is paying him/her what.

Roll on full disclosure of mortgage commission!

Sarah

www.rea.ie
 
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