Can somebody explain these deals... have I missed something ?

illuminate

Looking at offers to extend my existing mortgage from my current lender (C&G) in order to buy out my ex. Found these on their website.

4.69% Fixed until 31 October 2011 2.50% for the remainder of the term 3.0% APR £495 Yes until 31/10/11

4.69% Fixed until 31 October 2011 2.50% for the remainder of the term 3.0% APR £995 Yes until 31/10/11

What I find strange is that 2 deals look exactly the same in terms of period and interest rate, yet one comes with a £495 arrangement fee, the other with £995.

Why would this be so ?

What also confuses me is that the cost calc for each gives me the same figure, yet as the arrangement fee is added onto the balance, should the latter not be higher given that they are interest only.

One other question. The equivalent variable rate deals only seem to offer a 0.1% saving on the interest rate. Where is the appeal in that, given that there is so little scope for the payments to go anywhere but up over the next few years ? (Other than the fact that they are available for LTVs up to 80%)

blueberrypie

illuminate wrote: »

4.69% Fixed until 31 October 2011 2.50% for the remainder of the term 3.0% APR £495 Yes until 31/10/11

4.69% Fixed until 31 October 2011 2.50% for the remainder of the term 3.0% APR £995 Yes until 31/10/11

What I find strange is that 2 deals look exactly the same in terms of period and interest rate, yet one comes with a £495 arrangement fee, the other with £995.

Why would this be so ?

The first one is for loans of up to 60% of the value of the property, the second is for loans of up to 75% of the value of the property. Higher LTV carries more risk for the lender.

What also confuses me is that the cost calc for each gives me the same figure, yet as the arrangement fee is added onto the balance, should the latter not be higher given that they are interest only.

If you click through to the "how much will I pay" page, you'll see this:
Where a product fee applies, it will be added to your new mortgage. You can then pay the fee off if you want to, or leave it on your mortgage to spread the cost. ***If you pay it off within 30 days of the start of your mortgage, no interest will be charged on it. If you leave it on your mortgage, interest will be charged on it as part of your main mortgage. As this will increase your loan amount, it will also affect the monthly payment on the main part of your mortgage.***

In other words, the calculation provided does not include interest paid on the fee.

opinions4u

illuminate wrote: »

Looking at offers to extend my existing mortgage from my current lender (C&G) in order to buy out my ex. Found these on their website.

4.69% Fixed until 31 October 2011 2.50% for the remainder of the term 3.0% APR £495 Yes until 31/10/11

4.69% Fixed until 31 October 2011 2.50% for the remainder of the term 3.0% APR £995 Yes until 31/10/11

What I find strange is that 2 deals look exactly the same in terms of period and interest rate, yet one comes with a £495 arrangement fee, the other with £995.

Why would this be so ?

The higher fee relates to loans above 60% of value of the property, reflecting the slightly higher risk in lending.

What also confuses me is that the cost calc for each gives me the same figure, yet as the arrangement fee is added onto the balance, should the latter not be higher given that they are interest only.

It is higher. By 0.0002% on a £100k loan over 25 years. But it is more than reasonable for the lender to quote the rate to 2 decimal places.

One other question. The equivalent variable rate deals only seem to offer a 0.1% saving on the interest rate. Where is the appeal in that, given that there is so little scope for the payments to go anywhere but up over the next few years ? (Other than the fact that they are available for LTVs up to 80%)

I would strongly consider sticking on the 2.5% SVR for a time and overpaying. This is (check your terms and conditions) a tracker at 2% above the BofE rate. Why not enjoy the low rate for a bit and chip away at the capital? Keep an eye on the fixed market, because at some point you may wish to jump on to one, but I think you should be able to enjoy 12-18 months paying a lot less.