mortagge broker

[SteelBlue05]

mortgage broker

My girlfriend is getting a mortgage via a broker with Ulster Bank. Initially she was going to go for a 35 year term on a 200k mortage. The broker is now saying to go for a 40 year term which I think is crazy.

This would obviously increase the commision for the broker? Thats his motivation for suggesting that? She can easily handle the repayments on the 35 year term but the broker said to get the mortgage she would have to go for 40 years. Thats surely not true is it?

Also the broker said she can reduce the term to 30 years or whatever at any time at no cost, would this be true?

 

[RainyDay]

Re: mortgage broker

This would obviously increase the commision for the broker?

Are you asking this as a question or making a statement? If it's a statement, I'd be interested to know where you got this from. I'm pretty sure that broker commissions are based on a % of the mortgage amount, and nothing to do with the term.

She can easily handle the repayments on the 35 year term but the broker said to get the mortgage she would have to go for 40 years. Thats surely not true is it?

The broker may be thinking that the bank may refuse you a 40 year term if they think the repayments are not manageable. It doesn't really matter whether she thinks the repayments are manageable. What matters is whether her salary/outgoings/repayments pass the banks tests, which include allowing for a 2% increase in mortgage rates.

Also the broker said she can reduce the term to 30 years or whatever at any time at no cost, would this be true?

If it's a variable rate loan, she can make additional repayments at any time to reduce her outstanding liability with no penalties involved. This will ultimately reduce the term (assuming she keeps up her current repayment level and interest rates stay flat).

 

[Sarah W]

The term won't affect the commission but the longer the term the more she can borrow as lenders work on the mortgage payment not exceeding a certain percentage of the net disposable income there to qualify for the amount required a 40 year term may be needed. And yes, on a variable rate mortgage the mortgage term can be reduced by overpayment at any time.

Not all mortgage brokers are sharks ya know Steel!

Sarah

www.rea.ie

 

[SteelBlue05]

Re: mortgage broker

Are you asking this as a question or making a statement?

As per the "?" in the sentence it is a question.

if it's a variable rate loan, she can make additional repayments at any time to reduce her outstanding liability with no penalties involved. This will ultimately reduce the term (assuming she keeps up her current repayment level and interest rates stay flat).

Does it make a difference if it is a tracker mortage?

 

[Sarah W]

Nope!

Sarah

 

[SteelBlue05]

The term won't affect the commission but the longer the term the more she can borrow as lenders work on the mortgage payment not exceeding a certain percentage of the net disposable income there to qualify for the amount required a 40 year term may be needed. And yes, on a variable rate mortgage the mortgage term can be reduced by overpayment at any time.

Not all mortgage brokers are sharks ya know Steel!

Sarah

Its a tracker if that makes a difference.
Ok, thanks, sounds like the broker is giving her the correct advice so.