Is Halifax's new no fees first time buyer mortgage a good deal?
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I read that Halifax launched a new 5.79% fixed rate, two year, fee free first time buyer mortgage
mark123
1 year ago
Expert Financial Adviser Answer
John Stirling
answered 1 year ago
According to their website it's 5.99% unless you are a Halifax current account customer with £1,000 pm credit in which case it is the 5.79% you quote.
As it is available to 90%, and furthermore pays some of your fees (still have to find stamp duty, and moving costs, and possibly some legal fees) it is quite competitive if you are a first time buyer with a small deposit.
However 5.79% is expensive compared to rates available for only slightly higher deposits, so the answer to your question is 'yes and no', in that it's good if you are borrowing 90%, or I suppose if your loan is very small, and fees make up a disproportionate amount of the overall cost, but it's expensive if you have other options in terms of the amount of deposit you can raise.
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As it is available to 90%, and furthermore pays some of your fees (still have to find stamp duty, and moving costs, and possibly some legal fees) it is quite competitive if you are a first time buyer with a small deposit.
However 5.79% is expensive compared to rates available for only slightly higher deposits, so the answer to your question is 'yes and no', in that it's good if you are borrowing 90%, or I suppose if your loan is very small, and fees make up a disproportionate amount of the overall cost, but it's expensive if you have other options in terms of the amount of deposit you can raise.
Expert Financial Adviser Answer
Paul Ross DipPFS CII(MP&ER)
answered 1 year ago
It's not bad, but a financial adviser would be able to assess whether it is good for you. If there's one thing I've learnt about lenders, they don't often give much away.
As mentioned by John, it's difficult to assess whether it's good or bad, as it all depends on your circumstances, such as your credit rating and how much deposit you have.
As mentioned also by John, I have looked at the website and there are "strings" attached, so tread carefully
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As mentioned by John, it's difficult to assess whether it's good or bad, as it all depends on your circumstances, such as your credit rating and how much deposit you have.
As mentioned also by John, I have looked at the website and there are "strings" attached, so tread carefully
Expert Financial Adviser Answer
Dr David Carter FPFS
answered 1 year ago
The fees-free element of this does make it an attractive deal, in my view. Taxing Halifax's figures on a £100,000 loan, and assuming that this will save you £2000 in all, a simple rough calculation (ignoring such things a compounding) during the first two years, it will save you about £1000 each year compared to a non fees-free deal.
In other words, it is similar in overall cost to a fee-charged loan of 4.99% or 4.79% , during the first two years. To get a true picture, therefore, you also need to take into account the so-called reversionary rate (the rate that will apply after your fixed period), by comparing the 3.99% after that first fixed 2 years with what other lenders would charge.
As you can see, and taking account both of the above answers, none of us can say definitively whether it is good or bad for you - the picture is more complex that it might seem and I would certainly recommend that you obtain sound advice.
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In other words, it is similar in overall cost to a fee-charged loan of 4.99% or 4.79% , during the first two years. To get a true picture, therefore, you also need to take into account the so-called reversionary rate (the rate that will apply after your fixed period), by comparing the 3.99% after that first fixed 2 years with what other lenders would charge.
As you can see, and taking account both of the above answers, none of us can say definitively whether it is good or bad for you - the picture is more complex that it might seem and I would certainly recommend that you obtain sound advice.
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
Sadly though some of these schemes have more marketing value than consumer value as the lenders are able to find even more creative reasons to decline - the most difficult to challenge is when the lender thinks the loan is not affordable.
i have had clients enticed by their bank offering a special for current account customers only to find that they would only offer a remortgage deal of 60% of what they already have with another lender because they didnt think it was affordable even though it fit perfectly within their published income multiples!
i think that some of these deals are becoming the equivalent of the 9p tins of baked beans.... a loss leader to get you in the door so that they can get you to take more profitable products from them instead.
there will be some people fortunate enough to meet the criteria for this particular deal and if once you have looked over the costs in the way David analyses, it can be compelling.
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i have had clients enticed by their bank offering a special for current account customers only to find that they would only offer a remortgage deal of 60% of what they already have with another lender because they didnt think it was affordable even though it fit perfectly within their published income multiples!
i think that some of these deals are becoming the equivalent of the 9p tins of baked beans.... a loss leader to get you in the door so that they can get you to take more profitable products from them instead.
there will be some people fortunate enough to meet the criteria for this particular deal and if once you have looked over the costs in the way David analyses, it can be compelling.
