Which of these mortgage deals to go for?

missis_amber

Deal 1 fixed for two years
1.83% with £995 fee
Monthly payment £341
Total cost over the two years £8192
Remaining debt at end of two years £79,467


Deal 2 fixed for two years
2.39% with £0 fee
Monthly payment £360
Total cost over the two years £8649
Remaining debt at the end of two years £78,896


So Deal 1 has lower monthly payments and costs less over the two years. But Deal 2 means that I have less debt at the end of the fixed period. Am confused Help greatly appreciated!

amnblog

Not sure what you are borrowing but it seems fairly likely that the 0.56% rate saving v the fee are just about cost neutral over two years.


Most likely in your example the fee has been added to Deal 1, hence the higher amount outstanding after two years.


Ask your broker or mortgage adviser (if applying direct to the Lender) which product is best for you.

getmore4less

Just do a like for like in a simple calculator.

http://www.whatsthecost.com/mortgage.aspx

add the fees make the payments the same see whats left.
paying £360 after 2 years (guessing the original loan is around £83645)

£84640 @ 1.83% £79010
£83645 @ 2.39% £78896

pinkteapot

You'll pay £457 more with deal 2, in exchange for which you'll clear £571 more debt. In other words, deal 2 gains you £114 (£571 less the £457 it costs you), and you can keep your £995 in the bank.

So I'd say deal 2 is better? It's a pretty small difference though.

Out of curiosity, why only fix for two years?

missis_amber

I want to fix for two years because that'll then get my LTV down to 60% in two years time, so hopefully I will have better choice of mortgages. Or should I go for a five year fix?