Quick remortgage calculation

NorthernMonkey1

Im currently with HSBC, and I think I'm going to swap rates from variable, to a much better fixed rate. I'm going to reduce the term to 14yr at the same time so the payments stay roughly the same.

currently £95,500 debt with an 82% LTV (we paid £120,000, I guess the bank have devalued/reindexed our house )

The 2 options I'm looking at are

1) 1.64% with a £749 fee - £637 a month
2) 2.14% with zero fee - £658

Over the 2 year fixed term, the second loan is £749 - (24 x £21) = £221 cheaper, so I'm better off with the zero fee loan

Is this correct?

ACG

I normally work on the basis that it is cheaper to go on a fee free deal if the loan is less than around £110-120k. Like anything there are exceptions to the rule, but you do need to do the sums properly.

Are you planning on adding the fee to the balance or paying it upfront?

NorthernMonkey1

I was planning on going for the fee-free option.

Just arguing with the bank now as to why they have changed their valuation of my house downwards. I'm close to the 80% threshold, which will knock another 0.2% off the rate

NorthernMonkey1

Just got off the phone to HSBC, and they have re-valued my property at £130,000 which means the LTV is now <75%.

Changing the term of the mortgage needs a re-application, but I can just change the rate, and then overpay the difference to achieve the same result.

Saved myself 3 years on the term of the mortgage for a 25 minute phone call. Definitely worth it

getmore4less

Add the fees make the payment the same and see how much is left will tell you which is cheapest.

getmore4less

The fee option is cheaper

on my phone so not easy to check but look like £130 when you pay the same.

The problem with the simple calc it does not take account of overpayments.

getmore4less

ACG wrote: »

I normally work on the basis that it is cheaper to go on a fee free deal if the loan is less than around £110-120k. Like anything there are exceptions to the rule, but you do need to do the sums properly.

Are you planning on adding the fee to the balance or paying it upfront?

Since you had the information to do the calc why not do it?

Paying fees or adding fees makes no difference you either have the money or you don't and adjust the borrowing.

getmore4less

back online properly to do the calcs.

£95,500
The 2 options I'm looking at are
1) 1.64% with a £749 fee - £637 a month
2) 2.14% with zero fee - £658

Over the 2 year fixed term, the second loan is £749 - (24 x £21) = £221 cheaper, so I'm better off with the zero fee loan


after 2 years
£95500 @ 2.14% paying £658 £83552
£96249 @ 1.64% paying £637 £83925
net (24*21) £504 in the bank £83425
£96249 @ 1.64% paying £658 £83413


Breakeven mortgage for this fee/rate/£658 payment is close to £82k.