Buying a house is ranked high on the stress scales (just below a bereavement and divorce) for good reason: it is simply the biggest single financial decision that most people make in their lifetimes and the opportunities for things to go wrong seem infinite. A video from the independent, fee-based mortgage advisers REA Mortgage Services is the first attempt of its kind to guide the buyer through the buying process.
Available at Xtra-vision and Chartbusters video rental chains, the 20-minute video is a mixture of general information about the buying process, types and cost of mortgages, mortgage protection insurance and the miscellaneous costs associated with legal fees and stamp duty. Running through the story, however, is a single message - `caveat emptor', buyer beware: from the opening sequences viewers are reminded that in every sale the auctioneer and the estate agent are working not on your behalf, but the sellers. (This despite the fact that some will even offer to help you arrange finance.)
The mortgage broker who accepts commission from the lender (the video notes that eight of the 13 lenders pay commission of between 0.5 per cent and 1.5 per cent of the purchase price) is not working on your behalf; nor is the lender objective. Since commission is also paid on mortgage protection assurance, the buyer also needs to be careful when purchasing this compulsory insurance. The REA video is firm in its message that the buyer needs to seek objective information and advice and to be conscious of the additional costs associated with the purchase, including legal fees which usually amount to 1 per cent of the purchase price plus £100 stamp duty, and other miscellaneous charges. While the video is mainly generic, and gives simple, clear definitions of the different kinds of mortgages and payment methods, and insurances, it does describe its own service towards the end - a fee-based one in which the flat rate £750 fee (regardless of the value of the property) includes the cost of conveyancing. REA also refunds any commission paid by a lender or assurance company. The savings is significant over the life of the mortgage.
The lending institutions have gone to some lengths in recent years to make the purchase of a mortgage more understandable and they have widened the product options to take into account the different financial positions of buyers. Discounted first-year rates are aimed at first-time buyers who are usually short of cash to furnish and decorate their new home; products like accelerated and flexible mortgages, first introduced by National Irish Bank, Bank of Ireland and the First National Building Society are mainly aimed at the established mortgage holder who understands the advantages of accelerated payments and who because of career breaks, maternity, etc, may find themselves in the need of mortgage "holidays".
The REA video does not go into any great detail about the finer points of the mortgage product range - its purpose, says the company's managing director, Richard Eberle, "was to try and provide the sort of information people need to have when they first set out to buy a property. Every lender hands out bits and pieces of information and lots of little booklets, but our experience with buyers is that they don't always read this stuff. We though the video would make it easier," states Mr Eberle.
The REA video, Buying Your Home, The Essential Guide, is also available to rent from REA Mortgage Services at 676 1595. More information about the company is available on its web site - http://www.rea.ie
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