Fee free or pay fee for better rate?

f1-fan_2

We are looking at getting an offset mortgage for 75k over 20 years.

With First Direct are looking at:

Offset base rate tracker (65% LTV) with no fee at 2.29% + base

or

Offset base rate tracker (65% LTV), £999 fee at 1.99% + base

With overpayments we are hoping to reduce the term to 16 years. Can anyone work out (or explain how we can work out) which is the cheapest to go for?

How do we work out what the 0.2% difference in rate will cost so whether we should pay the £999 fee or not? Thanks!

epsilondraconis

You could use this calculator because it allows you to make a comparison between the two mortgages (and allows you to input the fees etc):

http://www.thisismoney.co.uk/true-cost-mortgage-calculator

dimbo61

The fee free one works out at £408.11 a month and you would pay £22,946 in interest
the £999 fee one works out at ££402.36 a month and you would pay £20,565 in interest

dimbo61

I have added the £999 fee to the mortgage in the second example but you would still be £2400 better off over 20 years taking the £999 fee deal.