Confused about rates

bentkl2

Can someone please help me understand the following, i'm looking at buying a house for 150k, with a 30k deposit, therefore requiring 120k mortgage. On the Natwest website there are 3 different options available for a 5 year fixed period. What I do not understand is the two fixed rate (none FTB Exclusive) options. One has a fee but the other one does not, but if you went for the one with the fee and this was added to the monthly amount (as shown on the Natwest website), this would still be cheaper than the one without the fee. so my question is, why would you go for the one without the fee, where the initial rate is higher and the monthly payment is higher?

Natwest
5 year fixed
Initial Rate: 3.15%
Rate thereafter: 4%
Overall cost for comparison: 3.9% APR
LTV: 80%
Product Fee: £995
Monthly Payment: £578.46
Monthly Payment with fee: £583.26

Natwest
5 year fixed
Initial Rate: 3.85%
Rate thereafter: 4%
Overall cost for comparison: 4.1% APR
LTV: 80%
Product Fee: £0
Monthly Payment: £623.51
Monthly Payment with fee: £623.51

Natwest
5 year fixed - FTB Exclusive
Initial Rate: 3.49%
Rate thereafter: 4%
Overall cost for comparison: 3.9% APR
LTV: 80%
Product Fee: £0
Monthly Payment: £600.10
Monthly Payment with fee: £600.10

Any help would be very much appreciated, thank you.

ACG

Its all dependent on the loan amount. Smaller mortgages are usually better without fees, larger mortgages are usually better with the fees.

bentkl2

Thank you for your kind response. So basically you would be daft to go for the no fee option in my case? I cannot see any advantage in going for the non-fee option, but i do understand what you say about smaller mortgages where it could be cheaper to pay a higher interest rate which would cost less than one with a lower interest rate and then the fee on top. Thank you.