Mortgage debt at end of fixed term.

Blue-eyedboy

Hi,

I’m attempting to work out what would be left owed on a mortgage at the end of a fixed term. After talking with HSBC I’m a little confused.

They offer two fixed over Two year. One at 4.99% with a set-up fee of £1499 and another at 5.49% with the set-up being £199.

If for example if I borrowed £135,000 over 25 years and HSBC say the monthly payments would be about £789 and interest calculated day to day. How much would be owed after two years?

Are there any maths type genius about on here that can help me with a formula to work it all out?

Many thanks.

sammyjammy

Assuming you didn't add the fees to the mortgage of £135k then your payment for the 1st option per month would be about £788.41 and you would owe £129,282 at the end of the fixed term assuming its exactly 24 months. For the 2nd option £828.21 and balance after 2yrs £129,670.

Don't forget you have to consider the extra monthly payment so the second option costs £388+(24x40.20) offset against the extra amount of the fee as well as the opportunity cost of having the extra money in savings or to spend etc.

Hope it makes sense

Blue-eyedboy

Thanks for the reply and the help!
From what you have written I think I can see that you end up paying about £300 more to be about £600 less in debt after two years with the first option. So they are very similar.

Gorgeous_George

Deal 1
a. £136,499 at £797.16 per month leaves £130,718 after two years.
b. £135,000 at £788.41 per month leaves £129,282 after two years.

Deal 2
a. £135,199 at £829.43 per month leaves £129,862 after two years.
b. £135,000 at £828.21 per month leaves £129,671 after two years.

GG