Mortgage Broker or do it myself?

A

Aoileen

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We finally went sale agreed on our property today after a lenghty time on the market for the house location. We accepted a lower bid than originally anticipated.

We had planned on getting a personal loan for approx 40K but now we need to get a small morgage (70K approx).

Any ideas where to look for a good deal?

I mentioned to one or two people that we went to a mortgage broker to source a mortgage for us and all said that we were crazy. All are of the opinion that because the amount is so low, a broker will just get us any deal and not neccessarly the best deal available.

Any information/thoughts you may have would be appreciated!
 
The brokers job is to source the best mortgage for your needs. It might be worth meeting one just to get an idea of whats available. If it puts your mind at rest maybe have a look yourself through the best buys on this forum and lenders websites also.
 

As a mortgage broker, naturally i would recommend you use the services of one!
To be fair, a €70K mortgage nowadays is very small (well done you!) and is going to provide a broker with no more than €700 income. This is a decent test of a good broker - will they provide the level of service and advice you would expect for a comparativly small return. A good mortgage broker should point out to you that you have a very low LTV, and advise you towards NIB, AIB, and possibly one or two others. Hope this helps?
 
I would use a broker if you are unsure on how to mortgages work, trackers, variable current account mortgages and do not understand why one type may be better that the other.
I did not use a broker. I used the previous threads on this site to find all the info I needed.
then knowing my LTV ratio I could check all the banks interest rates to see the best value. Then went to the banks for a offer in principle and see who would go the cheapest. Also if you are very busy at work/play you may not have time to do all this, so then a broker would be doing all the legwork. Brokers should give you the best mortgage for you, but as Clubman says not all brokers deal with all lenders and some lender pay more commission than others to the broker.
 
If you're comfortable with variable rates and your property is worth more than €140,000 then National Irish Bank have the lowest Tracker Variable Rate around at 0.5% above ECB, resulting in a nominal rate of 4.5% at present.
 
Thanks all for the replies

As mortgage is low I had just presumed that I would go for a variable interest rate but now I'm not to sure

I sound like the guy on the ad on the telly, but honestly...I don't know what a tracker mortgage is. I am going through an information overload at the moment as things are moving so fast so basically I want to find out:

Q.1. Is it worth my while researching trackers?

The LTV is 19% - 20% if that makes any difference

I have researched online the different rates but then found out (i think!) that the rate advertised may be different to the one I get offered due to the LTV?

Q.2. Am I correct thinking this?

I have been in contact with a broker and they are sending me an application today.

Q.3. When I return the application and I get a response back from the broker am I obliged to take it or can I say that I've changed my mind?

Thanks in advance.......I'd be lost without this forum
 
Dave Vanian said:
If you're comfortable with variable rates and your property is worth more than €140,000 then National Irish Bank have the lowest Tracker Variable Rate around at 0.5% above ECB, resulting in a nominal rate of 4.5% at present.
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It is highly unlikely that a broker will be able to get a better variable rate deal than National Irish Bank.

I sound like the guy on the ad on the telly, but honestly...I don't know what a tracker mortgage is.
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The rate is determined by the ECB's (European Central Bank) base rate, the rate at which lenders borrow their money. The Tracker Mortgage is a variable rate of interest with a fixed margin set on top of the ECB rate. This margin is guaranteed for the life of the loan. When the ECB rate changes, the mortgage rate will immediately change accordingly i.e. it is always tracking the actual cost of funds plus the lender's pre-set margin.

It's an improvement over a Standard Variable rate as a lender can increase their margin over ECB with a Standard Variable Rate.

To be fair to your broker, I'd advise them from the start that you're also considering looking elsewhere and if you get a better deal than what they offer you'll take it. Some brokers will charge a fee if you get a loan offer from them but don't take it - check in advance with the broker about this.
 
Some brokers will charge a fee if you get a loan offer from them but don't take it - check in advance with the broker about this.
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How exactly can they charge a fee?
 
Thanks for that Dave.

Am I right in thinking the following then:

If the ECB base interest rate increases by eg. 1%, my lender will increase my rate by 1% and a maximum extra of 0.5% if I have a tracker variable rate however if I have a standard variable rate, my rate will increase by 1% + whatever extra my lender wants?

Do lenders normally increase a persons interest rate by more than the ECB base rate though, and if they do, by what percentage? I know each lender is different but if you could give me any guidelines I'd really appreciate it.
 
Munsterdude said:
Funnily enough, if you ask them to do a job for you, and they do it, some form of payment is normally part of the process.
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If you go into a clothes shop and ask the assistant do they have a pair of jeans in a certain size, she goes to look for them, finds them, you try them on and then decide not to buy them..you don't quite expect a bill to arrive in the post afterwards...even if they have 'done a job' for you.

I'm not being facetious, but surely they can only expect payment if you go ahead and take the mortgage through them?
 
Munsterdude said:
Funnily enough, if you ask them to do a job for you, and they do it, some form of payment is normally part of the process.
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If the charges were stated and agreed beforehand in writing - then fine. If not - then I wouldn't pay them.
 

Yes - ECB base rate is currently 4%. An ECB + 0.5% tracker mortgage is therefore currently charging at 4.5%. If the ECB puts up rates by 0.25%, the ECB + 0.5% tracker will go up to 4.75% and no more.

I don't have historic rate data readily at hand, but Permanent TSB's standard variable rate is currently 5.35% even though they themselves have lower tracker variable rates available. They won't give existing customers the better tracker rates except they're asked. Not singling out Permanent TSB - most lenders operate similar practices. I just happen to have Permanent TSB's rates readily available to me.
 
If the loan is 80% or less of the value of your home then National Irish bank's LTV mortgage is the cheapest available. As NIB do not deal with brokers you would have to deal with them directly. It should be noted that you cannot top up an NIB LTV mortgage for anything other than home improvements (i.e. not cars, holidays, weddings etc)
So there is a downside straight away of dealing through a broker...the cheapest mortgage on the market is unavailable to you.
However if you are unsure about things like LTV, trackers and fixed rates a broker can help you. Plus not everyone has the time to organise a mortgage themselves...the broker collects the relevant forms (P60's, etc)
If I were using a broker I'd look for one who release a breakdown of which banks they deal with and the volume of the business. I know REA do this for example. This is important as different banks pay different commissions. Some pay 0.7% of the value of the loan, while others pay 1% of the value of the loan. An honest broker will recommend the most suitable product while a dishonest broker will recommend the product which yields the most commission.
 
Thanks Dave and thanks all for the replies.

A tracker is what I'm going to go for.

I can know stand up on the bus and say: 'I know what a tracker mortgage is!'
 

The comparison isn't fair - there's an awful lot more work for a broker in obtaining a loan offer than for a sales assistant locating a pair of jeans.

Typically the work involved would be as follows: -

Discuss the requirement with the client
Discuss the various rate options (variable, tracker, fixed, interest-only, discounted etc.) and provide quotations for the cost of any suitable options
Send out salary certificates and advise the client what other documents will be required to support their application
In some cases, follow up when the client doesn't send in all the requested documents
Arrange completion of the application form
Submit the application to the lender
Once approved, arrange the valuation

The questions people ask about a mortgage application tend to be more time-consuming and involved than the questions asked about a pair of jeans. Most people understand a pair of jeans fully - what you see is what you get.

That said, a broker should make it clear from the outset that a fee may be payable if they get a client a loan offer and the client subsequently decides not to take it up.
 
Andy, our LTV is 19% - 20%. Do NIB rates decrease in line with LTV?

Broker has advised an ECB of 4% plus an greed margin of 0.55% ie 4.55%. Will I get a better offer with NIB?
 
For a small mortgage which you might get paid off in less than 10 years you might want to consider fixing it ? NIB again offer the best 5 year fixed rate with their "LTV" mortgage - at 5.02 for 5 years. It might ease your mind about increases in rates - but of course you would lose out if rates dropped again. Either way - NIB will give you the best rate currently tracker or fixed. You will see discounted rates from other lenders that may be similar or even slightly lower thn NIB (i.e Halifax, AIB) - but these other low rates are only for the first 12 months.
 
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