fees versus interest rate help, please

k3v

Ive just had an adviser round to sort out my re mortgage and I don't understand the figures could someone please help.

Im borrowing 72000 over 16 years, fixed for 2. What he is suggesting is a mortgage with an £1800 fee.

Basically the cheltenham and gloucester one he recommends is 5.28% with an £1800 fee, which means i pay £570.12 a month,is this better than RBS one with 6.14% paying 593.86 with a fee of 499?

now i see the one he recommends tells me I pay the least amount back over 2 years 13682.91 against 14252.64. What im not sure of is because im adding 1800 to the mortgage as opposed to 499 will i end up owing more after the 2 years up? my brain hurts!

cheer for looking

k3v

thanks for your quick reply, could you explain the last part your reply a little more please. what im trying to work out is which one will leave me owing the least amount on my house after 2 years.

k3v

what i want to do is calculate how much i will owe in 2 years, although i pay less over 2 months, i pay less in interest due to the lower rate. Maybe i should look at this tomorow when im fresher....

ive thanked you for your help though

Jammasterjizz

Hi K3v,

If you look at the last pages in your illustration for C&G or RBS, they give a schedule of your repayments and the outstanding debt. All the figures will be there

k3v

Jammasterjizz wrote: »

Hi K3v,

If you look at the last pages in your illustration for C&G or RBS, they give a schedule of your repayments and the outstanding debt. All the figures will be there

cheers for the reply,

i dont have the illustrations, just a printed table of figures, none of which show me the outstanding value after 2 years, it seems odd that i can borrow 73800 instead of 72500 and it be a better deal with only a small change in interest rate

k3v

http://www.hsh.com/calc-amort.html


I've used the above and mortgage with the high fees, leaves me owing 67602 against 66823.

why would he recommended the high fee option? it would seem that the mortgage comparison tables which show the true cost of borrowing over 2 years don't give you the whole picture, if I go with the one which appears to ge the best, I end up owing 779 more.

payless

Adding a big fee to a low rate makes things look cheaper per month.. but on a mortgage of that size is questionable, as the debt will be higher at end of fix

Unless low payment is you priority - I would consider a new adviser ! - epecially when you consider that there's a better product from one of those lenders you mention ( may be others eslewhere also)

hint that rate is 5.28% + 2.5% fee ( £1800) .. so on a very simple calculation over 2 yrs

2.5% + 5.28% +5.28% / 2 = 6.53%
( thats ignoring the fact that interest is charged on the fee added)

find a fees free rate below this and bingo

k3v

thanks for the help, a low monthly figure is not a priority. you have confirmed, what I thought. ill speak to the adviser and let him know I don't want to take it further

payless

jam master- you need to read the rules for brokers you can't post a link in signature

Jammasterjizz

Payless-

I've read them now and made the changes...

ta!

Mr_helpful

Due to the complexity of working out which is best fees or interest rate should it not be challenged with the FSA under their treating customers fairly rule