2 Year fixed 85% LTV - Cheapest?

skyking_comms

Hi,

I am currently looking for a 2 year fixed rate 85% Loan to value repayment mortgage. It will be a 25 year mortgage.

The cheapest I have been quoted is 4.69% by HSBC, but comes with the £999 fee, plus other costs.
Is there anything better out there? Need to get something in place ASAP.

Thanks

Darren

kingstreet

skyking_comms wrote: »

Hi,

I am currently looking for a 2 year fixed rate 85% Loan to value repayment mortgage. It will be a 25 year mortgage.

The cheapest I have been quoted is 4.69% by HSBC, but comes with the £999 fee, plus other costs.
Is there anything better out there? Need to get something in place ASAP.

Thanks

Darren

Purchase or remortgage?
Amount of mortgage?

Paying set up costs is probably not a good idea for a smaller mortgage, where the rate is less important.

The best rate for a remortgage is 3.99% with Norwich & Peterborough, subject to £995 fee, valuation fee of c£303 and legal costs.

The best fee-free remortgage deal is 4.49% with Post Office, with no arrangement or valuation fees. Legal costs are still payable.

For a purchase, Yorkshire BS is at 4.59% with £995 fee and valuation fee of c£295. Your legal costs are as per your purchase quote from your solicitor.

skyking_comms

Thanks for the reply which has been very encouraging.

Its a purchase, with a loan amount of £121,125.

I phoned the post office and they can offer a 4.29% with £995 fee, which gave cheaper monthly payments than their 4.49% without fees.

I also phoned the Norwich and Peterborough and they were unable to offer all the money we needed (about 4k off), but could offer it over a 30 year period and we could over pay to reduce the amount of time.

Thats confused me. As id imagine I wouldnt be able to reduce it to 25 years from 30 years by over payments. Also with the Post office I could over pay and reduce that further. But the rate is .3% higher than N&P

Im confused.. what should I do?

Thanks

Darren

GMS

Post Office with a £995 fee may well be cheaper per month but by how much? Does it cover the £995 fee?

If you kept the mortgage for only 2 years the £995 fee works out at £40 ish per month.

More to working out best overall cost than the monthly payments.

kingstreet

Darren,

As I tried to suggest and as GMS has pointed out, you need to take the fees into account in working out the best deal for YOU!

For example, £121k @ 4.29% over 25yrs = £665.39pm.

Over two years, you'd pay £15,969 + £995 fee = £16,964 in total.

In addition, if you add the fee to the loan, you're then paying interest on it for the time it's added.

If you take the no-fee deal, you'd pay £679.31 per month, or £16,303 in total, leaving you over £600 better off if you avoid the deal with the fee.

In terms of your confusion, I'd suggest you think about taking the best deal you can for the first two years. If you can't overpay as much, save the money you would have paid in an ISA and use it to repay a lump sum when you can do so without penalty, ie at the end of the fix and before you take a new deal or remortgage to a new lender.