Mortgage Fee Question

RockLobster · 25 Jun 2015 at 16:38

Hi

Is it best to go for a mortgage with a fee or not? £811.14 - £784.14 = £27 a month difference. £27 x 48 months (4 yrs) is £1296 therefore saving £297 if I go for the mortgage with a fee. Or is it not as simple as that?

Skeeter · 25 Jun 2015 at 16:41

Whatever you do, don't add the fee to the mortgage. You then pay interest on the fee too.

RockLobster · 25 Jun 2015 at 16:43

Skeeter said:
Whatever you do, don't add the fee to the mortgage if you have one, pay it outright up front.

Ok thanks for the tip. Paying outright is not an issue.

lee1101 · 25 Jun 2015 at 16:44

Skeeter said:
Whatever you do, don't add the fee to the mortgage. You then pay interest on the fee too.

Not sure if I agree with that. I would add it to the mortgage for protection, then just pay it off straight away by overpaying. Avoids the interest then.
Saves you losing the fee if it falls through for any reason.

alx · 25 Jun 2015 at 16:45

Are the interest rates different between the mortgage with and without a fee?

You can use this calculator compare mortgages with different fees, rates etc http://www.thisismoney.co.uk/money/...-calculator-Compare-true-cost-rates-fees.html

RockLobster · 25 Jun 2015 at 16:46

The interest rates are 2.24% (4 yrs) with £999 fee and 2.54% (4 yrs) no fee.

RockLobster · 25 Jun 2015 at 16:47

lee1101 said:
Not sure if I agree with that. I would add it to the mortgage for protection, then just pay it off straight away by overpaying. Avoids the interest then.
Saves you losing the fee if it falls through for any reason.

I maybe wrong lee although I think Nationwide don't charge you a fee if it falls through.

EddScott · 25 Jun 2015 at 16:48

RockLobster said:
Hi

Is it best to go for a mortgage with a fee or not? £811.14 - £784.14 = £27 a month difference. £27 x 48 months (4 yrs) is £1296 therefore saving £297 if I go for the mortgage with a fee. Or is it not as simple as that?

It's pretty much as simple as that.

Difference in monthly payments times the number of payments made during the mortgage special rate. If the fee is higher, go for no fee. If the fee is lower, pay the fee.

I would also check if solicitors fees are included - they aren't always. And check cost of valuers as this can very too.

RockLobster · 25 Jun 2015 at 16:52

alx said:
Are the interest rates different between the mortgage with and without a fee?

You can use this calculator compare mortgages with different fees, rates etc http://www.thisismoney.co.uk/money/...-calculator-Compare-true-cost-rates-fees.html

Good link thanks.

Cost over deal period inc fee:£38,637.92 (Fee)
Cost over deal period inc fee:£38,934.76

so as I've calculated in my initial post I'm saving just under £300.

RockLobster · 25 Jun 2015 at 16:58

EddScott said:
I would also check if solicitors fees are included - they aren't always. And check cost of valuers as this can very too.

Will keep that in mind. These mortgages include "free standard legal fees". I guess there may be hidden extras.

NovemberRain107 · 25 Jun 2015 at 17:04

I believe it depends entirely on how much you are borrowing.

If you are borrowing less then the no fee option with a slightly higher % rate will be better.
If you are borrowing more then the fee option with a slightly lower % rate will be better.

To figure out 'less that what' and 'more than what' will require some quick work on a calculator.

ToejaM · 25 Jun 2015 at 19:07

For what its worth, I recently moved my mortgage to a different product with my current mortgage provider. Zero fee.

I rang up with all intentions of getting a better deal using comparison sites and I didnt even need to say anything, they already gave me a better deal than I'd found.

As for your question, you have the answers above just thought I'd say ring your current provider as they may offer better or the same with no fee as its with the same provider.

iaind · 25 Jun 2015 at 19:18

The other thing to consider is that adding the fees to the mortgage can sometimes seem cheaper but your loan is a grand more than it was before - if prices fluctuate or you move later down the line, it could push you into a higher LTV bracket