FTB with big deposit. Good time to tie into a fixed rate for 10years?

getmore4less

mickym wrote: »

ok thanks for that.
i think i see where you are coming from!


Still going for the non fee one as it works out best for us at the moment. thanks for the help.

why?

The fee based one save £1200 over 10 years for the same monthly outlay

ray123

Chelsea BS are offering a 10 year fixed at 3.99% with £1495 arrangement fee. I checked the mortgage calculator and it should work out around £1000+ cheaper over 10 years.

However, max loan to value is 70%. If you are able to negotiate a discount on the purchase price of 155k, you may be able to qualify for this deal.

http://www.thechelsea.co.uk/mortgages/products/10yr-fixed-70ltv-3060.html

getmore4less

Thrugelmir wrote: »

Lenders like people to add their fees as over 25 years earns them a lot of extra interest.

As I have shown allready for the borrower(and indirectly the lender) it makes no difference to the financial outcome.

You have to add the fees or reduce the no fee borrowings to do the comparison so can just ignore paying up front or adding to the mortgage.


In this case we are talking about a fee of £900 for a rate reduction of 0.2%
this means that the borrower pays around £200py more capital on the lower rate for the same monthly payment, so pays of the extra £900(and interest) in around 4.5 years and saves a further £1200 after 10.

Thrugelmir

getmore4less wrote: »

As I have shown allready for the borrower(and indirectly the lender) it makes no difference to the financial outcome.

You have to add the fees or reduce the no fee borrowings to do the comparison so can just ignore paying up front or adding to the mortgage.

I was referring to the tactic of incorporating fees into the balance owed. Chelsea BS is £1495 of which £195 is upfront and £1300 added to the mortgage. Chelsea don't give an option merely say added on the website.

Having worked in finance for many years. Easy to see through the tricks that are employed to squeeze every last penny of margin from a product.

mickym

here are the details of the fee in full:

'£995 (£195 of this fee is payable on application and is non refundable, £800 is added to your mortgage on completion)'

so it is added to mortgage rather than paid upfront as initially thought.

getmore4less

Thrugelmir wrote: »

I was referring to the tactic of incorporating fees into the balance owed. Chelsea BS is £1495 of which £195 is upfront and £1300 added to the mortgage. Chelsea don't give an option merely say added on the website.

Having worked in finance for many years. Easy to see through the tricks that are employed to squeeze every last penny of margin from a product.

If you have the money to pay the fees and want to pay them up front you just ask to borrow £1300 less in the first place, end result all fees paid up front.

Thrugelmir

mickym wrote: »

here are the details of the fee in full:

'£995 (£195 of this fee is payable on application and is non refundable, £800 is added to your mortgage on completion)'

so it is added to mortgage rather than paid upfront as initially thought.

Hard to them objecting if you wished to pay it.

getmore4less

mickym wrote: »

here are the details of the fee in full:

'£995 (£195 of this fee is payable on application and is non refundable, £800 is added to your mortgage on completion)'

so it is added to mortgage rather than paid upfront as initially thought.

So just borrow £800 less if you want to pay the fees.

Why do you want the no fee option when the fee based product is better?

Doshwaster

Thrugelmir wrote: »

I was referring to the tactic of incorporating fees into the balance owed. Chelsea BS is £1495 of which £195 is upfront and £1300 added to the mortgage. Chelsea don't give an option merely say added on the website.

Having worked in finance for many years. Easy to see through the tricks that are employed to squeeze every last penny of margin from a product.

I was actually advised by my independent broker that even if you can afford the up-front fees then it is better to get them added to the loan then pay them off as a lump sump soon after completion. The reason for this is that if anything was to go wrong with your mortgage application then it can be a slow process to get the refundable part of the fees back.

getmore4less

Doshwaster wrote: »

I was actually advised by my independent broker that even if you can afford the up-front fees then it is better to get them added to the loan then pay them off as a lump sump soon after completion. The reason for this is that if anything was to go wrong with your mortgage application then it can be a slow process to get the refundable part of the fees back.

Easier to just borrow less and that avoids any ERC fees

Also if LTV is done before the fees are added then that is a benifit is to the borrower who may be able to squeeze onto a lower rate or even onto a LTV that give them a mortgage.

The borrower has total control over how much they borrow from the lender so they decide, the lender makes nothing extra from adding fees if the borrower does it right.