Natwest offers new record low 2.95% 5 year fixed rate mortgage

neilem

purch wrote: »

I am sure the term "Bankster" will appear somewhere in the thread soon :eek:

Sure throw £50 for "adminstration" costs would be fine. However, £1500 - £2500 is unacceptable... unless there is some unknown yet deserving reason why they are entitled to charge this amount of money. As I see it, the borrower did the hard work by saving, and the low rate (about half a percent or so) is only temporary, you aren't even paying to have it as a permanent rate. Bandits.

andyroberts1967

neilem wrote: »

I was looking to do a 60%-65% LTV when getting my first house, unfortunately I wasn't aware about these upfront fees at the time of saving for this deposit. I'm still baffled why there is this penalty/fee for being a more attractive borrower?

I don't think this is an up-front fee, I'm sure you can put this on to the life of your mortgage, can't you?

neilem

shortchanged wrote: »

Because they still need to make their money from somewhere.

Many of these ultra low rates are nothing but headline grabbers. A cheap way of gaining publicity seeing as the media plaster it all over the place.

That's what I thought, so the 3% interest rate for a few years isn't enough for them, so they have to swindle even more to fill their pockets. What is the point working towards a 60-70% LTV ratio if the rate you are getting is almost nullified by this fee? I'm just wanting to understand, not ranting at your answer by the way

chewmylegoff

neilem wrote: »

The current interest rate is at a record low, and under this ecomonic downturn, it doesn't appear to be increasing anytime soon. So savers are taking a hit. I was looking to do a 60%-65% LTV when getting my first house, unfortunately I wasn't aware about these upfront fees at the time of saving for this deposit. I'm still baffled why there is this penalty/fee for being a more attractive borrower?

sorry, i thought you already had a mortgage, didn't really read properly.

you're not being penalised. the cost of a mortgage is a combination of the interest rate and the fee (and you may want to factor in overpayment cap and early repayment charge).

with a 40% deposit, you could get the five year fix with a 2.95% interest rate with a fee of £2,500 that is being talked about in this thread.

with a 10% deposit, you would have to pay nearly 5.00% interest (5 year fix) and a fee of perhaps £1,000.

basically with a fee of £2,500 they are saying they don't want to do business with people borrowing small amounts.

RenovationMan

neilem wrote: »

Such as? Apart from getting the next flight to Las Vegas and putting it all on your favourite colour... there isn't many options for us financial newbies

You mentioned in your original post: "also the stock markets are very up and down (not that I can play in stocks and shares anyway). "

By not looking into the stock (or bond) market your options are more limited. I'm assuming that you want an investment where your principle sum is safe, which means that you are pretty much restricted to Cash savings.

chewmylegoff

neilem wrote: »

Sure throw £50 for "adminstration" costs would be fine. However, £1500 - £2500 is unacceptable... unless there is some unknown yet deserving reason why they are entitled to charge this amount of money. As I see it, the borrower did the hard work by saving, and the low rate (about half a percent or so) is only temporary, you aren't even paying to have it as a permanent rate. Bandits.

so is a 5 year fix at 4% with no fee acceptable? or would they be bandits too?

wotsthat

neilem wrote: »

That's what I thought, so the 3% interest rate for a few years isn't enough for them, so they have to swindle even more to fill their pockets. What is the point working towards a 60-70% LTV ratio if the rate you are getting is almost nullified by this fee? I'm just wanting to understand, not ranting at your answer by the way

It's pretty simple - best buy tables focus on headline rates and Natwest want to be at the top. It'll be a great deal for some borrowers but there's no compulsion to buy this mortgage if not.

RenovationMan

neilem wrote: »

Sure throw £50 for "adminstration" costs would be fine. However, £1500 - £2500 is unacceptable... unless there is some unknown yet deserving reason why they are entitled to charge this amount of money. As I see it, the borrower did the hard work by saving, and the low rate (about half a percent or so) is only temporary, you aren't even paying to have it as a permanent rate. Bandits.

It's just a product that is not appropriate for your circumstances. You just need to look at products that are tailored for you. That product would be fine for someone in my circumstances, as I described earlier:

RenovationMan wrote: »

A real-life example using my £250,000 IO mortgage:

With fee: £252,495 at 2.95% for 5 years = £37,243 paid in interest.
Fee Free: £250,000 at 3.69% for 5 years = £46,125 paid in interest.

So I would be better off by £8882 by paying the fee than going fee free.

If I were in the market for a 5 year mortgage, then I'd do this calculation with all of the market leading providers to see which was the best value over the 5 years.