which deal would cost me less?

devon123

Hi everyone

I'm on the SVR of A&L at the moment - 4.99 - and have been dithering about what to do for many months. Now I'm regretting it as most portfolios have been updated and the longer fixes with good rates have vanished.

Anyway, A&L have offered me the following and I can't work out which would be better value in the long run.

House value: 150k
Outstanding balance: 76.5k
Term of loan I want to take: 13 years

Rates: 3yr @ 3.99 with a 999 fee (I can pay this upfront or add to the loan or @ 4.49 with no fee.

4yr 4.69 with no fee or 5 yr 4.99 no fee.

I aim to overpay when I can. My job is secure and I earn 27k.

CAn you help? WHat would you do? Even using that great spreadsheet from locoblade I still can't work it out....:(
Thanks for your help.

theoretica

Have you used this and looked at 'cost over deal period including fee'?

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

This will let you compare the with and without fee deals. whether you want to fix for 3,4 or 5 years depends on what your crystal ball thinks will happen to interest rates, and how much you value the security of knowing your mortgage can't shoot up until the end of that period.

joepubli

with an extra 0.5 pct you would be paying 380 per year extra with the 4.49 deal. There isn't much in it - the 3.99 is a bit cheaper (380x3) = 1140. But then if you borrow the 999 you would pay an extra 40 per year on that. so its even stevens!

If you had a larger loan, 3.99% would be a better deal.

getmore4less

OK relatively simple to do this with a simple calculator but you have missed of the follow on rates(guess 4.99) which do make a difference to the later guesses.

http://www.whatsthecost.com/mortgage.aspx

Start with the deals(add on the fees to make them equal starting points.
All over 13 years total do each in a new tab

£76500 @ 4.99% £667.50pm current deal
£76500 @ 4.49% £648.24pm 3y fix no fee
£77499 @ 3.99% £637.53pm 3y fix £999 fee
£76500 @ 4.69% £655.90pm 4y fix
£76500 @ 4.99% £667.50pm 5y fix.

So the biggest monthly payment is £667.50 call that £670pm

you now have 5 tabs with a mortgage calculator in them

Change to interest only and make the payment £670pm recalculate and look at the details.

After 3years which is when the first 2 fixes end compare the amounts still owing that will tell you the cheapest over 3 years.
After that you have to guess on rates because the 3 year goes variable or new fess

see what you get and post the result I will check later if I remember to keep the tabs open.


Paying the fees up front makes no significant difference to the which is best calculations. anyone that tells you otherwise get them to show you how much.

Meeper

In addition to all of the above, Alliance & Leicester are now Santander and as far as I am aware their SVR should have changed to match the Abbey SVR of 4.24%. Regardless of anything else you should look into getting that changed initially.

devon123

Thanks everyone.

Meeper - I phoned them and they said this wasn't the case. Is this incorrect?

Getmore4less - thanks so much for that. The results are...
4.99 - 67,638
4.49 - 66,882
3.99 - 67,215
4.69 - 67,183

As there's not much in it, I think I might go for the 4.69 or 4.99.

Thanks again for your help!

dimbo61

Guessing that all of them allow the same overpayment limits and Me I would go for the longer fixes and OP as much as possible

getmore4less

devon123 wrote: »

Thanks everyone.

Meeper - I phoned them and they said this wasn't the case. Is this incorrect?

Getmore4less - thanks so much for that. The results are...
4.99 - 67,638
4.49 - 66,882
3.99 - 67,215
4.69 - 67,183

As there's not much in it, I think I might go for the 4.69 or 4.99.

Thanks again for your help!

Great you did this now you have the basics doe doing your own calcualtions once you get into it you can do all sorts of senarios with a simple calculator.

I kept my tabs open, so checked...

those numbers don't look right you need the feb(today jan yesterday) 2014 number for 3 years not the 2013 numbers they are for 2 years.
rate 2years 3 years
4.99 - 67,638 £62,865.22
4.49 - 66,882 £61,740.35
3.99 - 67,215 £61,758.47
4.69 - 67,183 £62,188.22

the key is that hte low rate high fee is not worth it but the 3 year fix does save over the 3 years is it enough to save over the next 1/2 years with the longer fixes probably not making the longer fix worth a look since it fixes you payment at current level.