Mortgage question

[hornetstinger]

Any opinions on mortgages that have a fee, and without a fee? Natwest for example, there is a ~£900 fee, but the interest rates are lower.

 

[Buffman]

Isn't it obvious to work out if the cost of the mortgage with the additional fee, and see if it is cheaper than those without the fee? Typically fees pay off for those with a higher loan

 

[Skillmister]

30 seconds of maths should give you the opinion.

 

[Haggisman]

There are also plenty of calculators online if you can't be bothered to work it out yourself

 

[Azza]

https://www.moneysavingexpert.com/mortgages/best-buys/


/thread

 

[Solus]

As people have said, each circumstance is different. You need the figures

 

[ruthers]

Work out over the mortgage term which will be cheaper in the long run..
E.g the three year term.

Depending on the person some may prefer a high fee with reduced monthly payments
Some may prefer a higher monthly with no fee

 

[Fluke?]

I had exactly this a couple of weeks ago. Initially we were looking at the one with a fee (Nationwide 3yr fixed, £999 fee) but then had a panic about what would happen if the house sale fell through and whether we get the fee refunded, so had another look at the no fee one.
Over the 3 years the no fee one actually worked out a few hundred £ cheaper than the one with the fee, even though the interest rate was higher.

I suppose if you mortgage is for significantly more than ours (~£150k + £50k deposit/equity from our sale) than the sums may give a different answer.

 

[Goksly]

When I was looking paying up front was cheaper over the whole term, but as I was buying a new home and not remortgaging, I included it in the term as if for some reason the sale fell through there might have been a point where I'd paid the fee but ultimately never took out the mortgage.

 

[toprock]

Give me some figures, amount to put on mortgage, interest rates with and without fee and over how many years and i'll compare the difference

 

[HangTime]

General idea is that the more you borrow, the less significant a fee becomes because it represents a diminishing proportion of the cost of your loan.

One thing to watch out for, that I have seen catch people out before, is when doing a comparison between two products with different rates, check how much debt is outstanding at the end of any fixed term. I have seen people do comparisons like over say a 5 year initial term I will pay £xxxxx with product A, and £yyyyy with product B, and just assumed that whichever involves paying the least is best.

 

[hornetstinger]

Going to Nationwide, 13 year mortgage, about £400 a month, no fee, 10 year fixed rate. About half of the house deposit

 

[toprock]

Going to Nationwide, 13 year mortgage, about £400 a month, no fee, 10 year fixed rate. About half of the house deposit

How much capital do you want to borrow? and whats the interest rate with no fee deal you've seen? and the interest rate with fee deal?

 

[hornetstinger]

2.59% fee
2.69% no fee

 

[samcat]

2.59% fee
2.69% no fee

And what amount is the fee?
What term are each of the mortgages?

Its simple maths really... If both mortgages are to borrow the same amount, and leave you with the same amount of debt at the end of the fixed term then simply do:

(Monthly Cost * Mortgage Term) + Fees

so for a 2 year fixed rate, one with a fee and one without:
(750 * 24) + 0 = 18000 or 750 a month
(730 * 24) + 1000 = 18520 or 771.67 a month

So in this instance the product without the fee costs less over the term of the mortgage, but more per month.
Just create a simple spreadsheet (Provider, Product, monthly cost, months term, fee then a couple of calculation columns, total cost (formula as above) and total monthly cost (total cost / term).

This will let you compare various products and terms and get a feel for how they compare on equal grounds.

 

[hornetstinger]

https://www.nationwide.co.uk/products/mortgages/existing-customer-moving/mortgage-rates

£100K house, £47K deposit. 13 years
£999 for fee

10 year fixed is 3.1% APRC no fee
10 year fixed is 3.6% APRC fee

 

[Kol]

Dude... it even says on the site exactly the amount you would pay, so you save £300 over the period by going with the £999 fee. I simply clicked your link, entered what you've just told us and it gave me this (took less than 20 seconds):

10 yr Fixed

Monthly payment
Initial rate
Product fee
Overall cost for comparison
Total paid over 10 years

More info and applyfor 10 yr Fixed
£501.80
2.59%
£999
3.6% APRC
£60,216.00
10 yr Fixed

Monthly payment

Initial rate

Product fee

Overall cost for comparison

Total paid over 10 years

More info and applyfor 10 yr Fixed
£504.22
2.69%
None
3.1% APRC
£60,506.40

 

[SMN]

Word of caution OP - some mortgage companies charge an arrangement fee per CHUNK of the mortgage; i.e. first direct have an arrangement fee of £725, but thats PER 400,000. So if your buying a 500K gaff, you're paying double. Just be careful.

"If you borrow more than £400,000, the booking fee is payable for each £400,000 and for any part amount over that so e.g. if you take a fixed rate mortgage with a booking fee of £725 and borrow £600,000, you pay a booking fee of £1,450."

 

[touch]

Dude... it even says on the site exactly the amount you would pay, so you save £300 over the period by going with the £999 fee.

Are you sure the total cost shown includes the fee?

 

[Kol]

Yes, because I used nationwide for my recent mortgage. They always include it in the overall cost for comparison.