MSE News: Mortgage rates hit record lows... but beware the high fees
Former_MSE_Jamie
Posts: 98 Forumite
"Some mortgages with higher headline rates may be more suitable, highlighting the importance of factoring in fees..."
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Mortgage rates hit record lows... but beware the high fees
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Mortgage rates hit record lows... but beware the high fees
Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
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Comments
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Does anyone know if first direct let you add 2k onto mortgage as it effectively means you need a further 2k to pay upfront otherwise.0
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Providing you are still borrowing within the criteria for the product. Then yes.
Adding the fees to the mortgage advance changes the dynamics of any cost saving in the longer term.0 -
Comparison is add extra 1k to mortgage when comparing
2.69% first direct 2k fee
Vs
2.99% post office 1k fee
I have 35% equity
Across 5 years on a 150k mortgage I'd cost me 2k more in interest but upfront cost is only 1k. I see what you saying about adding to mortgage as its effectively last bit you repay.0 -
After 5 years the difference between the amount you'd still owe is£89.
So very little in it.0 -
how'd you work the figures out?
I did a quick 'fag' packet calc which admittingly doesn't take into account compound interest.
So 0.3% extra interest per year works out at £450 extra per year (or £37.50 a month).
If I paid £37.50 a month extra with the first direct mortgage meaning i paid same mortgage value i'd be chipping away at the £1k extra fees.
Over 5 years I'd pay an extra £2,250 off the first direct (removing the 1k fee and paying about £1,100 extra off the mortgage).
Have i miscalculated?0 -
Current 5-Year Fixes
The cheapest Post Office rate is 2.74% whilst First Directs is 2.69%. There's only a 0.05% savings, not 0.3%.
However, the First Direct product is available up to 65% LTV.
If your LTV is less than 60%, you're more than likely better with the Post Office due to the lower fee. If it's a remortgage, your more than likely better off with the Co-Op as their deal includes legal fees and a valuation and is only 0.05% more expensive.
If you are on an LTV of 60-65%, then you are comparing the Post Office 2.98% deal to the new First Direct 2.69% deal with £1,000 extra fees. If your loan is above £70,000 here, the First Direct product is worth a further look. Otherwise, stick with the Post Office.
If you are on an LTV of 65% - 70%, Tesco Bank have a 2.89% offer - 0.09% cheaper than the Post Office product. However, the Post Office product has lower fees. Here, you're more than likely better with the Post Office unless you are remortgaging as the Tesco product includes legal fees and a valuation.
Then, for 70-75%, it's a straight cut choice of the Post Office.0 -
how'd you work the figures out?
A link for you. Ignore the $ signs. Numbers are numbers.
http://www.calculator.net/mortgage-amortization-calculator.html0 -
Just gone for a 5 year fix with Britannia. (£60,000 remortgage @ 2.79.) as opposed to the 2.74% Post office deal. Both charge £995-£999 fee however free valuation and no legal fees with Britannia.
At 2.79% it works out costing £150 more in interest than the 2.74% Post Office 5 year fix......however.....the extras charged by Post Office add £750 to the cost including a further £240 valuation fee, £195 lending fee, a £258 legal fee and a £60 Land Registry fee.
Therefore despite the slightly higher rate, this deal with the Britannia is saving me £600 over 5 years. And I can over pay up to 10% of outstanding amount each year without penalty.
Top Deal!!!!!!!!0 -
For smaller mortgage amounts, it's vital to ensure that fees and cashbacks don't skew the potential savings of a very good rate.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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Interesting I thought only the coop branded deal had the flexible overpayment facility. I went for the coop deal rather than the Britannia (for which a broker commission rebate might have been available) on that basis.toptipper-tal wrote: »Just gone for a 5 year fix with Britannia. (£60,000 remortgage @ 2.79.) as opposed to the 2.74% Post office deal. Both charge £995-£999 fee however free valuation and no legal fees with Britannia.
At 2.79% it works out costing £150 more in interest than the 2.74% Post Office 5 year fix......however.....the extras charged by Post Office add £750 to the cost including a further £240 valuation fee, £195 lending fee, a £258 legal fee and a £60 Land Registry fee.
Therefore despite the slightly higher rate, this deal with the Britannia is saving me £600 over 5 years. And I can over pay up to 10% of outstanding amount each year without penalty.
Top Deal!!!!!!!!
With coop I will also get about £60 divi payments each year
Edit - I am hedging my bets though, I have requested the latest possible remortgage completion date so if a better deal comes along in the next 3 months I can 'switch' and only lose the £150 booking fee I think....0
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