swithching mortgage - product fee

spaceboy

Natwest is giving me various switching options, some with a product fee and some without. Can anyone explain why this is?

da_rule

The product fee, paid up front, essentially buys you a better interest rate and lower monthly payments.


You'd need to do the calculation as to whether the amount of money you're paying up front is more or less than the saving over the life of the product and of course whether you can afford to pay it.

spaceboy

da_rule wrote: »

The product fee, paid up front, essentially buys you a better interest rate and lower monthly payments.


You'd need to do the calculation as to whether the amount of money you're paying up front is more or less than the saving over the life of the product and of course whether you can afford to pay it.

Why is there a product fee?

spaceboy

Sadly I cannot pay the product fee just now. So my options are 2 year 2.59% fixed or 5 year 3.18% fixed. I guess the 5 year is the safest bet.

Thrugelmir

spaceboy wrote: »

Why is there a product fee?

Enables lenders to target the product at a minimum size of mortgage.

getmore4less

spaceboy wrote: »

Sadly I cannot pay the product fee just now. So my options are 2 year 2.59% fixed or 5 year 3.18% fixed. I guess the 5 year is the safest bet.

ask if you can add it to the mortgage.

Then do the calculations on the fee or no fee rates.

spaceboy

getmore4less wrote: »

ask if you can add it to the mortgage.

Then do the calculations on the fee or no fee rates.

Is it as simple as working out if the no fee rate is more expensive than the fee rate plus the fee? (eg adding the fee to how much you pay over 5 years with the fee rate)

robsmg

As I have worked for NatWest, if you take advice from one of their mortgage advisors, they will be able to tell you if it is cost effective for you to pay a product fee. They have a calculator that will do this for you.

You will be able to pay it up front, or add it to the mortgage balance