How can we get the best mortgage deal?

Q My partner and I are looking to buy our first house in London, but we are in the same pickle as many first time buyers - we don't have a deposit. We are thinking of asking his parents to take out a personal loan for us of about ?20,000, which we would then pay back each month. Is this legal?
Also, we are very confused about the mortgage process - would it be best if we asked an IFA to find us the best deal? If so, would they truly give us the best deal or simply the product on which they get the most commission? How much should you pay for a broker anyway?



TL



A There is absolutely no problem in getting your parents to provide a personal loan. In theory this should be included as a debt in your mortgage application since it is an additional burden in meeting the repayment costs. However it depends whether your parents will want a formal agreement in writing or agree to an informal family arrangement which would not be legally enforceable, although there would be a moral commitment.

As to the mortgage process, I personally prefer to use an independent specialist mortgage broker because in my experience they can get better deals by being able to go to a variety of lenders.

Unfortunately there are some rogues who are driven by commission and you might find it easier to deal with a single lender like a bank or building society. Do not be deceived, both will want their pound of flesh although it may be gathered in different ways.

The independent broker may receive a finder's payment from the lender or charge you a fee. The arrangement should be agreed right at the outset. In theory the "finders" payment may influence the broker's recommendation, but who cares if you are receiving a good deal?

Beware, however, brokers and single lenders will both try to sell you insurance products, on which they earn hefty commission. These products may not be good value or really be needed to meet your circumstances. They will be sold hard, so be firm.