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  • FIRST POST
    • Theydontmakeiteasytosave£
    • By Theydontmakeiteasytosave£ 3rd Jan 18, 8:45 PM
    • 9Posts
    • 16Thanks
    Theydontmakeiteasytosave£
    Re-mortgaging - Option 1 or Option 2?
    • #1
    • 3rd Jan 18, 8:45 PM
    Re-mortgaging - Option 1 or Option 2? 3rd Jan 18 at 8:45 PM
    Hello all,

    I'm looking for some help to choose from the options below, which seems like the better option to you and why?

    I do have savings that were going to be used for a new bathroom but I could put it towards the mortgage for option 2? I do want to start overpaying the mortgage which both these deals allow for a 10% overpayment each year.

    House value £170,000
    Current mortgage £130,746
    Re-mortgage offering upto £129,500 only. I'm just under the 75% for lower rates.

    Option 1 – Keep the borrowing at £129,500 and switch to the 85% Loan to Value product of 2.05% fixed rate until 31/03/2023 with a £999 Product Fee which can be added to the loan and monthly payments of approx.. £475

    Option 2 – Stay with the 1.90% 5 year product and reduce the borrowing to £126,500 plus £999 Product Fee this would mean you would need to pay about £3,500 along with the £126,500. Monthly payments of approx...£455.
Page 1
    • getmore4less
    • By getmore4less 3rd Jan 18, 9:57 PM
    • 31,168 Posts
    • 18,681 Thanks
    getmore4less
    • #2
    • 3rd Jan 18, 9:57 PM
    • #2
    • 3rd Jan 18, 9:57 PM
    Do they have any fee free options what rate are they?
    • Theydontmakeiteasytosave£
    • By Theydontmakeiteasytosave£ 3rd Jan 18, 11:49 PM
    • 9 Posts
    • 16 Thanks
    Theydontmakeiteasytosave£
    • #3
    • 3rd Jan 18, 11:49 PM
    • #3
    • 3rd Jan 18, 11:49 PM
    I can't remember the fee free interest but it took the monthly payments over £500 per month
    • enthusiasticsaver
    • By enthusiasticsaver 4th Jan 18, 6:37 AM
    • 5,162 Posts
    • 9,813 Thanks
    enthusiasticsaver
    • #4
    • 4th Jan 18, 6:37 AM
    • #4
    • 4th Jan 18, 6:37 AM
    The second option is obviously cheaper so I would go for that and save up for bathroom or put it on 0% credit card. Have you only looked at your existing lender deals?
    Debt free and mortgage free and early retiree. Living the dream

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    • Theydontmakeiteasytosave£
    • By Theydontmakeiteasytosave£ 4th Jan 18, 7:41 AM
    • 9 Posts
    • 16 Thanks
    Theydontmakeiteasytosave£
    • #5
    • 4th Jan 18, 7:41 AM
    • #5
    • 4th Jan 18, 7:41 AM
    No, I've shopped around, Coventry were coming up cheapest so would switch to them. I've never had a credit card but will look into a 0% card thanks.
    • getmore4less
    • By getmore4less 4th Jan 18, 7:41 AM
    • 31,168 Posts
    • 18,681 Thanks
    getmore4less
    • #6
    • 4th Jan 18, 7:41 AM
    • #6
    • 4th Jan 18, 7:41 AM
    I can't remember the fee free interest but it took the monthly payments over £500 per month
    Originally posted by Theydontmakeiteasytosave£
    Which does not tell you if they are cheaper overall

    For your two options you are not comparing like for like as there is a difference of £3k on the borrowing


    £170,000/£130,746 LTV 76.9%
    £170,000/£129,500 LTV 76.2%
    £170,000/£126,500 LTV 74.4%

    in 5 years
    £126,500 2.05% £475pm £110,157
    £126,500 1.90% £475pm £109,224

    The second option is £933 cheaper over 5 years.

    From that you can work out the true cost of borrowing the £3k using the mortgage and compare against other options that will work with whatever cashflow you have over the 5 years
    • Theydontmakeiteasytosave£
    • By Theydontmakeiteasytosave£ 4th Jan 18, 6:53 PM
    • 9 Posts
    • 16 Thanks
    Theydontmakeiteasytosave£
    • #7
    • 4th Jan 18, 6:53 PM
    • #7
    • 4th Jan 18, 6:53 PM
    Thanks so much for breaking that down!
    • ValiantSon
    • By ValiantSon 4th Jan 18, 8:56 PM
    • 192 Posts
    • 180 Thanks
    ValiantSon
    • #8
    • 4th Jan 18, 8:56 PM
    • #8
    • 4th Jan 18, 8:56 PM
    Don't add the fees to the loan! You'll end up paying interest on them too. Pay them upfront and then they only cost what they say they cost.
    • getmore4less
    • By getmore4less 5th Jan 18, 10:02 AM
    • 31,168 Posts
    • 18,681 Thanks
    getmore4less
    • #9
    • 5th Jan 18, 10:02 AM
    • #9
    • 5th Jan 18, 10:02 AM
    Don't add the fees to the loan! You'll end up paying interest on them too. Pay them upfront and then they only cost what they say they cost.
    Originally posted by ValiantSon
    When doing the numbers it really makes no difference as any borrower only has so much cash they can put into the pot thy either have the money or they don't and can always over pay if they do have the cash and get added.

    You could just as well say borrow less as you will be paying interest on the amount you borrow.

    often the best option is to borrow less and add the fees because they become payable a bit later and you save some interest and sometime they only get paid if you complete where as paid up fron they can be non refundable.

    if that borrowing less and adding can get you into a lower LTV then it can make a big difference in favour of adding the fees.
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