Please help Mortgage comparison headache

suze369

Hi

I hope the good people of MSE can help me, I have been looking at my mortgage options and quite honestly, my head hurts.


My current tracker deal is due to expire. I am in a position to pay off a £4k lump sum which will bring me down the 75 LTV (just!) of £84k on a house valuation of £112,000.


My pickle is that I would really appreciate a second opinion on what is best to do, and frankly find the financially savvy members of this forum a better bet than friends or family.


I have decided to take a 2 year fixed mortgage to ride out any rises in that period whilst I make a concerted effort to lower my mortgage even further and be in a lower LTV next time round.


To that end I have found two mortgages that tick the boxes for me of ease of approval,fix duration, ethical banking, over-payment options etc...


Mortgage 1:- 2.04% fixed for two years with a £899 fee £403.70 per month
Mortgage 2:- 2.59% fixed for two years with £0 fee £426.18 per month


To my mind the second is a better deal but I am quite a novice at this and accept I may not be considering all the angles.


Now I could find the extra £899 to ensure I pay the fee either upfront or even add it to the mortgage and just pay an additional amount off the mortgage balance. This would eat into my savings or possibly shares (which are actually climbing quite well at the moment) and for a £22.48 difference in monthly mortgage payments I think it would take me longer to pay £899 back to myself as I intend to move deals again in 2 years (£22.48 X 24 = £539.52). Adding it to the mortgage would put me in a 80% LTV bracket and the deals I find aren't so attractive as either of these.

My savings are in an Privilege ISA currently paying 2.8%.


I would appreciate any constructive advice you may have.


Thanks in advance :beer::beer:


Suze

ACG

Im not sure you will open a flood of lower rates at 70% LTV, the next major banding is 60% or possibly 65% ltv.

suze369

Hi ACG

Thanks for your reply. Yes, my next target in two years will be to get 60% LTV. Just keen to make sure I get the best deal now to ensure every pound is well spent on these current deals to help me reach that goal.

GMS

60% rates in 2 years could be higher than 5 year fixed rates for 75% deals today.

Don't assume the rates of today will last. Swap rates are rising so indications are that mortgage rates may well do the same

[Deleted User]

What was your reasoning behind choosing a 2 year deal - have you considered 3, 4, or 5 years?

suze369

Thanks for your replies

Looking at the market and the offers available I couldn't see any 5 year fixes that compared with 2 year ones, certainly not for my LTV, although I am sure there are some out there.

My own choice at this stage in my life is to do a 2 year deal and as above really, I have found two deals that meet the majority of my criteria and was only wondering the mathematics of lower rate and higher fee vs. higher rate and lower fee

ViolaLass

suze369 wrote: »

Thanks for your replies

Looking at the market and the offers available I couldn't see any 5 year fixes that compared with 2 year ones, certainly not for my LTV, although I am sure there are some out there.

The other posters are talking about 5 years rates now compared with the two year rates in two years' time.

Mokka

To work out which deal is better divide the fee by 24 and add to the rate of the lower mortgage.
You could look into a lifetime tracker with no exit fees, but I am not sure if there are any good deals out there for 75% LTV.
5 year deals are better for peace of mind, but obviously the rates are higher.

suze369

Hi ViolaLass

Thanks for your response. I understand the good advice given by the others re rates and the inevitability of rate increases and am sure they relate to others circumstances and are helpful.

As mentioned in my OP after a lot of investigation I found those two 2 year fixed mortgages that suit my needs at this time. As is the way with writing things down, reading back over my options it has helped me decide which way to go between the two so thank you all very much for taking the trouble to comment

Cheers

Su

suze369

Mokka wrote: »

To work out which deal is better divide the fee by 24 and add to the rate of the lower mortgage.
You could look into a lifetime tracker with no exit fees, but I am not sure if there are any good deals out there for 75% LTV.
5 year deals are better for peace of mind, but obviously the rates are higher.

Hi Mokka

Thanks that is a great tip. I just did as you suggested and with the lower rate and higher fee mortgage it actually turns out the payment would be £15.41 a month more than a higher rate but no fee. That certainly adds up over 2 years!

Thanks for your advice.