Cheltenham & Gloucester Building Society Mortgages

When buying my first house, I had no money, and C&G were one of the few lenders who supported 'vendor deposit' paid, enabling me to get a step on the property ladder, although sadly they have now stopped this practice.

NB: Most lenders however, do allow builder deposit paid on new properties.

It is always advisable when taking out a mortgage, particularly for the first time to use a Independent Financial Adviser or ...
...lenders, taking into consideration all the borrowers personal and financial circumstances. This prevents the borrower making a number of mortgage applications that can result in numerous credit searches on your file, hence when you actually arrive at your choice, you may be refused the loan based on the number of credit searches already undertaken.

Independent Financial Advisers (IFA's) can often obtain a 'AIP', "Agreement in ... more

When buying my first house, I had no money, and C&G were one of the few lenders who supported 'vendor deposit' paid, enabling me to get a step on the property ladder, although sadly they have now stopped this practice.

NB: Most lenders however, do allow builder deposit paid on new properties.

It is always advisable when taking out a mortgage, particularly for the first time to use a Independent Financial Adviser or Mortgage Broker, who can search through a list of available lenders, taking into consideration all the borrowers personal and financial circumstances. This prevents the borrower making a number of mortgage applications that can result in numerous credit searches on your file, hence when you actually arrive at your choice, you may be refused the loan based on the number of credit searches already undertaken.

Independent Financial Advisers (IFA's) can often obtain a 'AIP', "Agreement in Principle" from a lender on your behalf. Most will not charge you for this service, but will try to sell you every insurance policy, life and otherwise, under the sun (they get their commission from this - well I guess we all have to make a living). You are not under any obligation to buy them from the IFA's, although it is a good idea to consider such policies which can be obtained much cheaper by shopping around from both main stream and direct insurance companies, and nowadays even supermarkets.

INTEREST RATES
I am now on my third mortgage with C&G, and whilst they may not have the most competitive rates on the market, first time around they gave me the option of freezing my 2 year fixed rate (6.19%) upon its expiry until the end of the financial year, which was very useful as I had just moved house, any monies accrued during this period were added on to outstanding balance. (current standard rate 5.95%).

My current mortgage is on a repayment basis with a 5 year fixed rate of 5.69% (lower than their current variable rate), and whilst I could possibly have benefitted from lower repayments in the early stages by opting for a discounted or short term fixed rate, I have some security in knowing that my mortgage repayments won't change during that period.

I could also have chosen from discount rates ranging from 1 to 1.5% over a 2 to 4 year period. C & G still offer Interest only mortgages (formerly endowment mortgages) - but I shied away from these following the considerable bad publicity over repayment shortfalls, which can be particularly harrowing if you fall into a negative equity situation. Imagine still owing the amount you borrowed in 25 years time and not being able to repay it all, doesn't even bear thinking about.

MIG
C&G do not charge a Mortgage Indemnity Guarantee (MIG), a relatively small payment required if the sum being borrowed is in excess of 75% of the property purchase price. Many lenders will try and convince you it is for your benefit (even though they make it compulsory - it is actually for their benefit if you default on your payments and they have to repossess the house). Many lenders have over the years been very crafty and managed to spread MIG payments over the course of a 25 year loan, thus customers incur the interest on the full value, a very expensive way to do things, but often first time buyers just do not have the money required to pay up front.

PENALTIES
C & G do not charge penalties if you move house, providing you retain your original product and are either borrowing the same amount or extending the loan.

If you are going to be borrowing less, there is usually penalties incurred on the difference (where relevant). Penalties with C&G are usually calculated on a sliding scale down to zero dependant on how long you have had the loan, e.g. 6% year 1, 5% year 2 and so on.

Many lenders, including C&G have started to revise their penalty clauses in light of considerable bad publicity, and although they still exist, they tend to, in many cases, last only for the term of the special rate period, which in light of the continued low mortgage rate are increasing dramatically, the C&G at the moment is offering a fixed rate of 5.69% for nearly 7 years, very useful if you are in a volatile employment situation. Make sure you read the small print.

When considering my current mortgage and bearing in mind the low interest rates, we elected to repay our existing mortgage and take out a new one with a fixed rate, there was no reward to customer loyalty, and C & G charged us the full whack on penalties, thus taking away any financial benefit from the sale of the old house.

I know we are saving more over the fixed period, but considering the amounts involved they proved to be very inflexible when it came to lowering their penalty charges, even my solicitors charm, wit and personality failed to win them over.

When all that is said and done, I tend to work on contracts, and to move over to the competition and trying to prove myself as a good lending prospect was not something that appealed to me when I was already a valued customer and benefited from extra special rates reserved for existing customers. See RBS Advanta even C&G rewards customer loyalty.

THE APPLICATION PROCESS
My initial application was made through the financial adviser who completed the application forms on my behalf, and did not charge for this service. The process was speedy, hassle free and the staff were very helpful and accommodating. Subsequent mortgages were dealt with by the branch themselves and again a similar process ensued, with no fees charged up front. C&G undertake a free valuation survey and DO NOT release the outcome of this survey to the lender, therefore, if not buying new, it is worth either paying C&G for a more comprehensive survey, or using an independent surveyor, your estate agent or solicitor can normally recommend some for you.

HOW DO YOU GET A C&G MORTGAGE?
The C & G mortgage can be arranged through any of their branches, or through any Lloyds TSB Branch (parent company), their customer service line, or 'on-line', where an Agreement in Principal (AIP) can be obtained. It may also be worth noting that if you don't mind not having the personal touch, that the C&G are currently not charging customers for applications made on-line for both mortgages and home-owner loans.

An AIP is a very useful tool, as knowing you have a certain amount of money available to spend, can put you in a very powerful position when chasing an available property, particularly if there are other buyers interested.

The website (www.cheltglos.co.uk) is user friendly, and offers a comprehensive breakdown of the products available, mortgage repayment calculators; one showing the benefits and financial savings on a flexible mortgage, graphically illustrated, not to everyone's taste,

The site also has a standard mortgage repayment calculator, where you can identify the type of mortgage required, i.e. interest only or repayment, the amount you want to borrow, the rate you wish to take advantage of and the number of years you wish to repay the sum over. This figure is for indication purposes only, don't forget if you are taking out a mortgage for the first time, there is buildings and content insurance costs to add on top, not to mention council tax and water rates (a water meter if it is a new property)

No Bank/Building Society will lend you money, unless you can prove that you have buildings insurance in place. This can be arranged through the C&G, although I am not sure how competitive their rates are, I know that many banks have been criticised for overcharging customers. Cheaper rates can be obtained from both high street and 'direct' insurance companies

If you are an existing C&G Customer taking out additional monies/new mortgage, any new borrowings are treated as being on a 10% deposit basis (as at 07/2001), even if you pay less, thus allowing you to take advantage of bigger cashback offers and more preferential rates.

C&G are not typically identified as a lender offering superior rates to their customers, but their service, combined with their lack of MIG premiums certainly make worth more than a second glance (apart from those darn penalties this time).

You should have life cover, in case the unthinkable happens, and it is also wise to consider some form of redundancy/sickness/critical illness cover just in case your cirumstances change; this can also be arranged through the lender, or your financial advisor (This is where they make their money selling policies).

SUE 

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