Which of these two mortgages?

Jet

My fixed rate mortgage comes to an end soon. I have been speaking to a IFA, who has given me the following two options on a £47,400 mortgage over 22 years - both options are fixed rate over 2 years.

Abbey - 4.45% , monthly payments being around £281.
There is a £699 arrangement fee which can be added to the mortgage but I would prefer to pay up front.

Halifax (My current provider) - 5.49%, monthly payments being around £309.
However, there is no arrangement fee for this one.

If I go for the Abbey mortgage and pay the £699 arrangement fee up front. This amounts to £29 per month over the 24 months. Meaning that the REAL monthly payment is around £310.

Are my thoughts correct or am I missing something?

payless

Remember on top of the £699 fee, you have also got to consider the £225 that halifax will charge to exit
( plus any other fees, minor costs time etc involved in swapping )


The savings on moving lender a small mortgage can be outweighed by fees - I know many people who woudl not bother swapping lender for the diffferences on the above examples ( not saying one should not review - even if inhouse! )

Some quick rough sums - and its a close call ( just comparing those 2 deals ) - plus there's a few other deals that I would have thought would have been in the mix if you were swapping (- including one from Abbey!! without the £699 fee )

rchddap1

Recently had to work out what to do with my £40k ish mortgage. Ended up staying with the Halifax on one of their fixed deals. After I worked everything out I figured that the costs were too high so decided to simply stay put.

dwsjarcmcd

Jet,
My arithmetic looks like (on an interest only basis, caus it's easier!)
Abbey - 47,000 x 4.45% x 2(years) + 699 = £4882
Halifax - 47,000 x 5.49% x 2 = £5160.60

I am sure others will correct me if I'm wrong or, even better, come up with some better 2 year fixed rates.

stanmoresaver

payless wrote:

Remember on top of the £699 fee, you have also got to consider the £225 that halifax will charge to exit

As far as i am concerned, this is the deal breaker- did your broker not point this out?

Jet

stanmoresaver wrote:

As far as i am concerned, this is the deal breaker- did your broker not point this out?

No, he didn't and it wasn't something that I had thought of either. Thanks for pointing it out.

KTF

The spreadsheet that I have put together should help make the comparison easier. Send me a PM with an email address in it and I will sent a copy of it to you.

cyberkidkiller

I wish the sums where that simple dwsjarcmcd you have to work it month by month and split your APR to monthly increases. Any way at the end of your term you will pay an extra £500 off your mortgages lump sum if you swap. But you have the fee of £699, which cancels that out so stick with Halifax if you can not find a better deal. Its just so scary how little you pay off you lump sum every year it peanuts.

HelpWhereIcan

Based on what you have posted, I have done a quick calculation using some software I have to see which 2 year fixed rate deals will save you the most over a 2 year period compared to taking the Halifax deal at 5.49 you have been offered. (the calculation takes into account interest, fees to set up and the £225 mortgage discharge fee Halifax will charge you to leave them).

There are not many and the Abbey 4.45% deal is not one of them.

The balance you have means that a £699 fee is approx the equivalent of an extra 1.47% in interest being charged over two years (699 is 1.47% of 47500). This means that the 'real' rate could be 0.73% higher (1.47/2), or to put it another way, changes a rate of 4.45% pa to 5.18% pa.

Now, there may well be a number of things I am not aware of, but I would also consider the Stroud & Swindon at 4.90% with no arrangement fee, free valuation and free legal fees or the Abbey's deal at 4.99% that also has no fees. There is also one with the A&L that is 4.99% with a refunded valuation fee, no arrangement fee and free legal fees but that reverts to a base rate of 5.49% for the long term (as does the Stroud & Swindon).

Not saying that you have been given incorrect advice, but I would ask your IFA why he did not feel they were suitable for you before signing on the dotted line.

Hope this helps

payless

Out of interest did the adviser put up the Halifax deal as an option , or did you give it to them...& are they charging you a fee

regularsaver1

Jet - you have been given info of the 5.49 with Halifax with no fee - there is another rate for mortgages above £40k with a fee