Mortgage help for homebuyers

MR RICHARD Eberle of REA, the feebased mortgage brokers, read last week's article about First National's new mortgage product, Mortgage Master with great interest.

"I think this is a terrific product - anything that allows a person to pay off their mortgage sooner, or have more control over the way they pay the loan is to be welcomed," says Mr Eberle. "But in your article you wrote that there is no extra charge or interest premium for this product, when in fact First National is charging a half per cent premium.

First National points out that it has set a special Mortgage Master discount first year rate - APR 6.95 per cent instead of the usual 6.45 per cent. "The first year discount rate is a loss leader for us," said the spokesman, "and while this Mortgage Master discount rate is half a per cent higher, at APR 6.95 per cent, it is still lower than the standard variable rate of APR 7.51 per cent which all new borrowers must switch onto in year two."

"Whether it is a loss leader or not - and I have my doubts since I believe mortgage interest rates are too high generally," says Mr Eberle, "I would recommend that anyone buying their first mortgage take the full discount rate on offer - 6.45 per cent for the first year and then take out Mortgage Master from year two, at the usual variable rate. There is no point in paying the extra half per cent rate for Mortgage Master in year one when you are going to have to go on the full variable rate in year two anyway.

REA Mortgage Services offers two fee based products, the REA Homebuyer Package, which for £750 plus VAT involves getting the best value mortgage on the market, a cash back option on the commission automatically paid by lenders to brokers and legal conveyance service.

The second product is the Mortgage Health Check which for £95 involves reviewing the client's current mortgage, plus checking the interest rate against other rates offered by the existing lender as well as other lenders on the market.