Totally confused

eneville

Hi All,

I'm hoping you may be able to assist. Do you happen to know what the difference is between the rate that Nationwide advertise (5.29% for a five year fixed) and the "Comparison rate" of 4.90%? Why are there two figures involved?

Also, of course as you guessed, is there a cheaper five year fixed out there (loan of 153,000; 30 year term; property value 193,000; 79.27% loan).

Thanks in advance

PasturesNew

Because you'd be paying some up front fees etc. So they have added up the total cost from start to end to come up with the comparison figure.

eneville

Thanks - however, the only product fee that we're going to pay is £400, but that doesn't seem to justify such a large difference in the rate. Does that make any sense, should I be expecting a cost of a few thousand pounds to exit - although no such cost has been brought to my attention!

getmore4less

folllow on rate will make a difference to the overall rate for 2 fixes that look the same.

comparison rates on mortgages are not that usefull for most people you ned to run the numbers to fit your plan

eneville

Does that mean running them both through a compound interest formulae - as that's what I was about to do (assuming I do the maths right of course)

dimbo61

Please take the " comparison rate " with a pinch of salt!
Just looked on the YBS website and they have for Example a 2 year fix at 2.99% followed by the SVR of 4.99% so the overall cost for comparison is 4.8%. Now thats because you only pay 2.99% for the first 2 years and then 4.99% for the next 23 years so really its a point less figure because the SVR will change over the 25 year term

getmore4less

Simpe mortgage calculator will do for most cases iuse

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

You need to use interest only but that does not matter it still works.

work out the payments for both loans and use the highest

Add the fees, make the payments the same and look at the amount owing at the data point that matters which is usualy the date the fix ends.

THis tells you which is best over the promotional period

Then you need to consider the follow on situation, if the rates are different which is best, would/could you remortgage, would you be wanting to move etc.

I might be the one that costs a bit more over fixed period has a good followon rate which makes it the better choice.

THats why there are a lot of people currently on base +<1% some very low like base +<0.2% and this is for the rest of their loan, some by luck some by carefull choice