which is cheaper????

eharkin1

Im hoping someone with a good sense of maths and calculations can help me. Im looking to remortgage my home in january as my fixed rate comes to an end in january. I will have £56000 left to pay at end of january.

My current provider (nationwide) has come to me with an offer of

A fixed rate of 5.18% for three years with a fee of £399 or a 3yr fixed deal of 5.58% with no fee.

I have also spoken to britannia who are offering me a 3yr fixed of 5.29% with no fees or a 5yr fixed of 5.34% with no fees.

I can obviously see that britannia will be cheaper to get set up but will the nationwide mortgage be cheaper overall even after i pay out £399?

Anyone know how i can work this out?

Robert_Sterling

I could do a more accurate calculation but I will cut a few corners here.

The difference between 5.48% and 5.18% is 0.3%
So the extra interest paid is in the region of:-
£56,000 times 0.3% equals £168 each year for 3 years i.e. £504

Although this is only an approximate answer it shows that the added cost of spreading the payment of the fee is about £100.

So there ios a break even point.

For a mortgage balance below £40,000 go for the 5.48% deal
For a mortgage balance above £50,000 go for the 5.18% deal

In between £40,000 and £50000 it does not matter too much.

N.B. Corners which were cut.

a) The mortgage is decreasing month by month. I ignored this.
b) How long the mortgage has left to run will also affect the answer.
c) I have ignored the "time value of money".

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I have only just realised you had mentioned also the Britannia.
Assuming the Britannia charges no fees e.eg., Arrangement Fees, Valuation fees. Then the Britannia is cheaper over three years.

I think the Nationwide does the 5 year at 5.18%
If this is so the Nationwide with upfront fee is better than the Britannia.

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The Fixed Rate might go up by about 0.25% at any minute so do not hang about.

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THIS IS NOT FINACIAL ADVICE