Mortgage - FTB - To fee, or not to fee?!

Yorkie84

Hi all,

First time poster, seeking some mortgage advice.

My wife and I are about to purchase our first house. We'll be taking out a mortgage with the Halifax, who have two options available.

Both fixed for 2 years. Option 1 is at 2.64% but with a £999 fee, which is added to the loan amount. Option 2 is 2.94% with no fee. Details as follow: -

Option 1 - 2.64%, £1k Fee, 25 Years
£134,000
£611 pm - 2 years = £14,664
Principal Owing - £126,221

Option 2 - 2.94%, No Fee, 25 Years
£133,000
£627 pm - 2 years = £15,048
Principal Owing - £125,573

Extra Paid - £384
Uplift in balance - £648

To me, the loan with no fee at the higher rate is clearly the better option, yet our mortgage broker has recommended option 1.. Is there something I'm missing?!?!

He also recommended a 35 year mortgage, whereas I'd much prefer a 25 year term from the outset. I believe the only difference is the smaller CONTRACTUAL repayment amount? I think the temptation not to make overpayments to take it up to the same paid on a 25 year deal would be too great, especially after Xmas etc, so would always go for the 25 year option.. Again is there something I'm missing?!

Thanks for reading, any advice greatly appreciated!!

hcb42

Don't go for a 35 yr mortgage if you don't need to, it's like a noose around your neck.

I would go for option 2 also,