Question on high startup fees

chivas

Hi,

I had originally been looking for a remortgage product which had less fees, at the cost of a slightly less competitive rate.

My IFA has just recommended a product at 0.51% below BoE with fees of about £1700. This seems like a good deal, but I was wondering if there is any hidden impact of adding the fees onto my mortgage instead of taking the rate hit and paying less start up costs?

My loan amount is £127000.

Thanks

dunstonh

Get your IFA to illustrate the difference. That is what KFIs are helpful for.

KTF

If you add the fees to the mortgage you will pay more interest.

A deal with a higher rate and less fees may work out cheaper over the term. Ask your IFA to illustrate a few more deals.

payless

Not a lot in it, but even good old H have rates with lower fees ( higher rates) that work out about the same or poss even less over the 2 yrs

larger loans are worth paying the really high fees, yours seems to be right on the balance

A low rate with a high fee will seem cheaper, but my guess is you will owe more after the 2 yrs - get adviser to show you the shedule of capital reapyments / balance outstanding .. this is easy with Halifax as they do it automatically , whereas with most other lenders we have to use external software

also check that existing lender is not offering a deal to stay , as adviser might not be telling you about that!

CARE H range about to be revamped.. not sure if its just the fixed rates or if these trackers will also go

chivas

thanks payless - well-spotted - the deal is with the halifax

Currently with NR, haven't been offered anything competitive to stay...

I suppose as I hope to be earning more in 2 years, that it may make more sense to incur the cost there.

I had heard before that high fee/low rate was generally a better policy for big loans - which is partly why I wanted to ask...

KTF

I believe Halifax are revising their rates tomorrow (Thursday July 12) so if you want one of their current deals you shouldnt hang about.

If you want to work out the true cost with the fee then divide the fee by the term and add it on to the monthly payment. That way you see the true cost of the remortgage and see which rate/fee combinations are better.

chivas

Also, I do quite like the sound of the halifax deal as it lets me overpay easily.

I've ran it through some true cost comparison sites over 2 years, and it looks like a good deal - I think I'm being indecisive...

payless

thanks payless - well-spotted - the deal is with the halifax

would not be much of an adviser if I did not spot that one

To be honest if looking at overpaying I would question that rate on your ( reducing?) loan size as the higher rates/ lower fees are more likely to suit- have not done exact sums though, would like to think the comparison sites would do it properly... but never sure !

KTF

chivas wrote: »

I've ran it through some true cost comparison sites over 2 years, and it looks like a good deal - I think I'm being indecisive...

Have you also run it through on the basis that interest rates will be at 6% and 6.25% as they may well go up before the end of the year.

payless

KTF .. as a non broker, how did you hear about Halifax rate changes?

KTF

I went to see a broker yesterday about a remortgage as mine is due to end in September. I had already found the Halifax 5.79% fixed/£599 fees deal on the Halifax Intermediary site and wanted him to double check my figures and see what deal he could come up with.

As it turned out he recommended the same deal and said that it was his understanding that the rates were going to be revised tomorrow (I have no idea if that is true or not) and he had recommended that deal to a lot of people as it was one of the lower 5 year fixes around at the moment compared to the competition.