No booking fee, or lower intrest rate?

mark432

I am a first time buyer borrowing £80,000 over 25 years and have decided to go for a 4 year fixed rate mortgage. I have the two options below from Alliance & Leicester:

4.84% (£995 booking fee, which I will add onto mortgage)
or
5.09% (no booking fee)

If I have a booking fee, I will need to add onto my mortgage and it will be charged interest.

I don’t mind paying slightly more each month if it means I save in the long term (25 years), so which is the best one to go for? Is it the 5.09%?

opinions4u

Using a quick and crude calculation, the difference in rate of 0.23% is £184 a year x 4 years = £736.

So pay the higher rate with no fee.

(there are more accurate ways of doing the calculation, but the 5.09% option will work out as the best of the 2 deals whichever way you do it).

VIGILANT22

The 995.00 fee will be compounded over the lifetime of the mortgage, not just 4 yrs......

phildo_2

Done rough figs based on monthly interest rather than daily interest:

Take the fee free option. - You will pay approx £6 per month more (£284 over 48 months) due to the higher rate but you will owe approx £674 less on the mortgage when you remortgage in 4 years time.