Help with mortgage product fees

GCW

Hi all

I'm getting a bit confused with the product fees on mortgages and whether or not they are a good idea or not. My current 4.24% fix ends at the end of June so I've been looking around.

I am comparing two deals at present:

Deal 1 - 2 year fixed rate, 1.64% = £770 payment monthly, with a £999 product fee

Deal 2 - 2 year fixed rate, 2.04% = £804 payment monthly, no product fee

The monthly difference is £34, multiplied by 24 months = £816.

So I'm paying out £816 more on the 2nd deal, but saving myself £999.

However its not as simple as that is it? What am I not accounting for?

kingstreet

Same lender, or different lenders?

If different, what is the outstanding balance after the two years?

grifferz

Plug your figures into a mortgage comparison spreadsheet like:

https://forums.moneysavingexpert.com/discussion/1157173

and compare the cost over 2 years and the remaining balance on the mortgage in each case.

GCW

kingstreet wrote: »

Same lender, or different lenders?

If different, what is the outstanding balance after the two years?

Hi - both deals are with the same lender (Nationwide)

GCW

grifferz wrote: »

Plug your figures into a mortgage comparison spreadsheet like:


and compare the cost over 2 years and the remaining balance on the mortgage in each case.

Thank you for this-that s/sheet is superb!

Seems it depends on if I add the £999 to the loan or not. Scenarios now appear to be:

1. 2 yr fix @ 1.64%, adding the £999 fee to the loan = 165,044 balance at end of 2 years

2. 2 yr fix @ 1.64% not adding the £999 fee to the loan = 164,118 balance at end

3. 2 yr fix @ 2.04%, no product fee = 164,686 balance at end

Seems option 3 is the preferable choice no? Balance is approx 568 higher than option 2, but I'm not paying £999 out

TrickyDicky101

Yes, but you've also paid out £800 or so extra over the course of the 2 years, so on that basis (2) is still better.

GCW

TrickyDicky101 wrote: »

Yes, but you've also paid out £800 or so extra over the course of the 2 years, so on that basis (2) is still better.

Of course! I was forgetting that, thanks.

dimbo61

Why 2 year fix ?
Are you planning on moving, selling property in 2 years time ?
Some very good 4 and 5 year deals !
What is your existing lender offering to existing customers ?
People are staying longer in a property due to moving costs.
Average is 28 years in Liverpool

GCW

dimbo61 wrote: »

Why 2 year fix ?
Are you planning on moving, selling property in 2 years time ?
Some very good 4 and 5 year deals !
What is your existing lender offering to existing customers ?
People are staying longer in a property due to moving costs.
Average is 28 years in Liverpool

No real reason, and not a definite that I will go with the 2 years. I have no plans to ever move from the property. I havent compared other lenders yet, but do have a friend (who is a mortgage advisor) assisting me with queries.