The Ultimate Mortgage Calculator discussion

getmore4less

OXFORD_SMOGGY wrote: »

I just found out the arrangement fee is £999 not 749, on the MSE calcluator it says this:

Only ditch your fix if you can get a mortgage with a rate less than...
(Based on a £301,064 mortgage, currently at 3.29%, with a £615 early repayment charge)
2.47%
If there's an arrangement fee, as mostly happens, the rate would need to be lower.
To save, you'd need a rate of...
ARRANGEMENT FEE TO SAVE, YOU'D NEED A RATE OF...
£500 1.81% or lower
£1,000 1.14% or lower
£1,500 0.48% or lower

The MSE calculator does stuff wrong so unless you know whats wrong you cannot fix the answers.

getmore4less

You are only comparing changing now to changing in 1 Aug.
your above interest calculation gets a rough number based on interest saved without taking into account debt reduction from the payments.

You have to pay the new mortgage fees if you change now or in 2 months so tiny difference which is just any interest on the cash but easier to just add to the debt at the time it is paid when doing the more accurate calculations(you do not spread it over 5 years or the 2 months it is a real spend at the time.

contractual amount paid and full term are the same thing change one the other changes so easier to just use the payment you plan to make(using the same for both means you don't have to account for the difference being saved and getting interest)

if you want to account for the 2 capital capital payments you run the numbers for the reduced amount and days for each, the reality is on £301k with around £1,500 payment(23y) you pay off around £700pm so if you do the interest numbers for say £299k(£17.26pd) you get a lowball saving against the highball for £301k(£17.32pd)

Over 83days that's £5.


if you look at the cash flows.....
stick with the current deal
£301k + daily interest on debt @ 3.29%
2 June payment 1 (debt goes down a bit and interest so far is paid off
2 July payment 2 ^^^^^
1 Aug arrangement fees for new mortgage get added to the debt.

change mortgage now to a lower rate.
NOW arrangement fees added to the debt.
interest on the bigger debt accumulates at the new lower rate
2 June payment 1
2 July payments 2

1 Aug see how much you owe.
........

On the 1Aug you compare the debt owed for the same real money from your pocket 2 payments.
Don't forget the interest not paid yet or roll forward to the 2 Aug include that payment).

The rough calculation comes out over £500 (83 days interest saved - ERC)
The other bits that reduce the savings won't get anywhere near that so you save money switching now.

It is a good idea to do the real calculations to get a feel for the differences it makes over the quick estimate.

OXFORD_SMOGGY

Ok great thanks for the help, damn thought I'd cracked it. Im a bit confused as won't I have to pay the arrangement fee outright? How much exactly will I save over the remaining current mortgage period of 83 days ish that is the critical part

OXFORD_SMOGGY

So I'll save £500 interest but have to pay £615 ERC so not worth it then? I'm a bit confused

getmore4less

500+ saved after paying the ERC.

OXFORD_SMOGGY

You the man thanks, just found out I am eligible for the £749 fee which is a further bonus, ERC is now £599.98. Going to get it switched job done.

I guess the easiest way to look at it is same mortgage length we will be reducing our monthly payments from 1542 to 1250, so about £300 saved each month, ERC seems to cancel that out so not sure how I make £500 over the two months, but every online calculator says switch.

OXFORD_SMOGGY

Only ditch your fix if you can get a mortgage with a rate less than...
(Based on a £301,064 mortgage, currently at 3.29%, with a £600 early repayment charge)
2.09%
If there's an arrangement fee, as mostly happens, the rate would need to be lower.
To save, you'd need a rate of...
ARRANGEMENT FEE TO SAVE, YOU'D NEED A RATE OF...
£500 1.1% or lower
£1,000 0.1% or lower
£1,500 -0.9% or lower

OXFORD_SMOGGY

if i put 2 months in tools it says not worth it if i put 3 it says it is. Very confusing

OXFORD_SMOGGY

this is cinfusing now, should I put 2 or 3 months in tool, seems to make big diference, if the tool is wrong why is it available on here, could be very dangerous to people using it if it is inaccurate

OXFORD_SMOGGY

What will my overall debt be on 1st of August if I stay and what will my overall debt be on 1st of August if I switch thats what I need to find out