Porting or new 25 year. Second opinion needed

jonnyb1978

What would you guys do ignoring interest rate.?

A new 25 year mortgage at £852 a month

Or

Port existing and new rate. 14 years at £951 then 11 years at £634 with the option of overpaying the surplus.

I'm sure it the latter but just after a second opinion. Can afford both so just looking which saves the most long term.
Thanks

Thrugelmir

Without details of the products concerned there's no way of evaluating the options.

jonnyb1978

Thanks, the products should be irrelevant as its payments im basing it on.

25 years. 3 year fixed @ 3.19 on a 176K loan = £852

Or

Port 45k with 14 years remaining at £317 a month on 2.5%
plus another 131k @ 3.19 over 25 years @ £634 a month = £951

Reverts to 3.99% after 3 years with the 45k portion no more than BOE+2%

I understand rates can go up/down but if they rise the savings should be proportional as they both rise by the same percentage

I know i can get better deals over 3 years etc etc but im comparing these two only

Thrugelmir

Personally I wouldn't give up 2% above base rate. Going forward you may well struggle to obtain borrowing at this rate. Also you'll incur no further product fee charges. Which will become increasingly disproportionate once the balance owes reduces.

In general with regards to mortgages there's no way to forecast the future. As interest rates are driven by external factors which come like bolts out of the blue. So the key word is uncertainty. The way to save money is to repay your mortgage as quickly as is possible. As it's the saving of compound interest that makes the difference.

kingstreet

As I said in your other thread on this subject the other day, you may not have to keep the 14 years on the ported rate. You could consider the whole mortgage over 25 years and make a proper comparison.

jonnyb1978

Thanks guys. I'm hoping nationwide can give us the 3.19% for 3 years fixed.

Kingstreet I understand what your saying but with 14 years left surely I will be praying more interest over 25 years. The idea of keeping the 14 years is that it's still affordable and once 14 years are up I can use the extra money to over pay our invest to help knock another 4/5 years of the mortgage.

Basically the most affordable way to pay the 176k off in the shortest time saving the most interest.

getmore4less

jonnyb1978 wrote: »

Thanks, the products should be irrelevant as its payments im basing it on.

Depends what you realy want to know but payments don't tell you the real story or how much it costs

25 years. 3 year fixed @ 3.19 on a 176K loan = £852

Or

Port 45k with 14 years remaining at £317 a month on 2.5%
plus another 131k @ 3.19 over 25 years @ £634 a month = £951

Reverts to 3.99% after 3 years with the 45k portion no more than BOE+2%

I understand rates can go up/down but if they rise the savings should be proportional as they both rise by the same percentage

I know i can get better deals over 3 years etc etc but im comparing these two only

Clearly the port option is best, as long as rates don't move much in the first 3 years and the SVR tracks at least a bit to base (which is exected) as as you keep more debt on a lower rate.

THAT'S why the terms of the loans are important without those you can't tell anything usefull.

Also in your first post you did not say the first option the payment would change after 3 years.


To do comparisons the easiest way is...
you need to set the starting point by adding fees to the debt
Make the payments the same each month
Track whats left on the debt.

getmore4less

jonnyb1978 wrote: »

Thanks guys. I'm hoping nationwide can give us the 3.19% for 3 years fixed.

Kingstreet I understand what your saying but with 14 years left surely I will be praying more interest over 25 years. The idea of keeping the 14 years is that it's still affordable and once 14 years are up I can use the extra money to over pay our invest to help knock another 4/5 years of the mortgage.

Basically the most affordable way to pay the 176k off in the shortest time saving the most interest.

If you can port the tracker on base + 2% extending the term to 25 then over pay the higher rate extra loan, you save interest.

getmore4less

you forgot the rate change at 3 years

The 25y £176k 3.19% changes to 3.99% / £926pm after 3 years
The 25y £131k 3.19% changes to 3.99% / £685pm after 3 years.