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No booking fee, or lower intrest rate?
Options

mark432
Posts: 7 Forumite
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%?
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%?
0
Comments
-
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).0 -
The 995.00 fee will be compounded over the lifetime of the mortgage, not just 4 yrs......0
-
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.0
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