a quick paying the fee up front (or not) question.

worto03

Hia,

A&L have told me it's best to add the fee onto the mortgage as it makes no diference to my rates, last time I paid it up front instead.

I'm thinking it's best to pay it up front, they have said that it makes no diference because if I pay it up front they don't recalculate the fact that I've paid it until the end of my fixed term anyway - 5 years!

But isn't paying interest on it over 5 years still better than paying interest on it over 26 years or have I missed something!

It's only £399 so might not make much diference either way but if I remortgage every few years it's gonna add up!

cheers,
worto.

P.S. quite why it takes them 5 years to notice I've paid I don't know - maybe they have really slow computers when it suits them!

Jacka87

As far as I am aware they charge interest on the total amount that you have mortgaged. Therefore if you mortgage the house as well as the fee then thats adding the fee to the total amount and thus you will pay interest for the whole mortgage on the fee. Assuming 25yrs worth of interest. However if you pay the fee up fron you only pay the fee with no interest. I would say pay the fee up front every time!

However it seems they are saying there computeres are going to charge interest on the fee for a period anyway, as you said conveniant that there computers are slow in this case!

dimbo61

If you have the money to pay the fee then do so.
Make sure that they are only charging you interest on the amount you have borrowed and not one penny more.
If you borrowed £80,000 you would expect to pay interest on £80,000 and not £90,000 so I dont know where they are coming from at all.
If you can afford overpay as well and become Mortgage Free asap GOOD LUCK

TEDDYRUKSPIN

THEY CHARGE INTEREST!!!!!! LOL.

The only benefit for putting a fee onto a mortgage if you really think or have some kind of psychic power (intuition) that you mortgage might not go through. Final one is that you are absolutely broke. Nearly missed that one. LOL.

Other wise, if you can pay it! Pay it! If not, the only option is the above.

Rick62

I would always advise adding the fee to the mortgage, because if you pay it upfront and for any reason the mortgage doesn't proceed then you will probably lose the fee.

If you then leave the fee added then you will be charged interest, however you could always pay it back immediately after completing.

littlemrtinkle

you could always add on the fee, and then once mortgage commences then overpay that amount. this would cover the above scenario. (just check mortgage allows overpayments). This is what we did.

_Andy_

Add the fee then overpay on completion.

koexelek

Rick62 wrote: »

I would always advise adding the fee to the mortgage, because if you pay it upfront and for any reason the mortgage doesn't proceed then you will probably lose the fee.

If you then leave the fee added then you will be charged interest, however you could always pay it back immediately after completing.

Spot on.

I always recommend that.

Lenders are quick to take a fee, but are often reluctant to refund one if things go wrong.

worto03

lol - thanks for the responses. The mortgage will defo go through I'm not worried about that so it seems paying it up front is the way to go.

As for overpaying I'm about to embark (one month in so far) on a 3-4 year plan to get 20k together for an extension then I have 1 year to get it built before the end of my 5 year fixed.

Hence the 5 year fixed - I don't want any crazy interest rates getting in the way of my master plan

Once done assuming all of this goes to plan I assume my LTV ratio will totally change if I get my house re-evaluated so it's kind of like overpaying in that respect (sort of).

Then comes the overpaying - once the kitchen and bathroom are big enough to swing my cats around in (I'm sure they'll love that!) and the girlfriend has altered the rest of the house beyond all recognition I can start to overpay on my next deal.

Cheers,
worto.

edit - just read the idea about adding it on then overpaying - thats a much better idea, I could add it on now then pay it off in Jan when I get to pay off upto 10% fee free - cheers - I'll have a look into that.

dunstonh

add the fee to the mortgage (just in case it doesnt proceed) and then pay it straight away after completion seems to be the most logical way.

AlecE

I didn't add the fee on to my £125k mortgage and all that happened is that Bristol and West (aka a Post Office mortgage) are only loaning me £124,371 - this is £125,000 mortgage with £599 fee and £30 for the electronic transfer taken off. I assume that if the mortgage does not go through for any reason then I won't actually have lost this £599 as I won't actually pay it until I get the loan. All I've paid out so far is the £480 valuation and Home Buyer's Report charge.

Perhaps I've missed something.

Alec