mortgage mindboggler- 2 yr or 5yr?

foxyloxy11

Thanks everyone for your replies. Thrugelmir think that's a great idea of paying the £30 a month difference off the mortgage. I only have 11 years left with a balance of £75000 and no plans of moving so that would help a lot.

thanks again...this is why I love MSE!

enjoyyourshoes

There are reasonable 7 & 10 year deals to, First Direct 10 year 2.49% fee £35 ?

tadaska

I'm thinking of going with the 10 year fixed from First Direct. If in lets say 2 or 3 years time the rates are still low and I wanted to go for a different deal could I do that? It says exit fee £149. Is that all I would pay to First Direct if I decided to remortgage?

getmore4less

foxyloxy11 wrote: »

Thanks everyone for your replies. Thrugelmir think that's a great idea of paying the £30 a month difference off the mortgage. I only have 11 years left with a balance of £75000 and no plans of moving so that would help a lot.

thanks again...this is why I love MSE!

Ok for £75k over 11 years with a 2/5 year fix with a 0.8% difference £30pm

have to guess the rates but lets go with 2% and 2.8% over 11 years

1. £75,000 @ 2.0% £633.44pm
2. £75,000 @ 2.8% £660.82pm

That's £27.38 near enough. over 2 years £657 difference

after 2 years you owe
1. £62,560.60
2. £63,021.94
so not only do you save £657 you owe £461 less a total of £1,118

now if we round up the payment on both to £661. after 2 years
1. £61,886
2. £63,017

total saving(with the overpayment)of £1,131.

[Deleted User]

AnotherJoe wrote: »

2 year and over pay the extra £30 as well unless you are able high tax rate payer in which case put that in your pension.

Rates would have to rise a lot for you not to be able to get a 3 year fix in 2 years time and not come out ahead overall.

And FWIW Brexit will tend to keep rates lower than otherwise so it's no reason to go for the longer one (there may be other reasons but it's not one)

Rates would have to rise a lot for you not to be able to get a 3 year fix in 2 years time and not come out ahead overall.

Yeah 0.2% is a huge difference...


Cheers

strawberries1

getmore4less wrote: »

Ok for £75k over 11 years with a 2/5 year fix with a 0.8% difference £30pm

have to guess the rates but lets go with 2% and 2.8% over 11 years

1. £75,000 @ 2.0% £633.44pm
2. £75,000 @ 2.8% £660.82pm

That's £27.38 near enough. over 2 years £657 difference

after 2 years you owe
1. £62,560.60
2. £63,021.94
so not only do you save £657 you owe £461 less a total of £1,118

now if we round up the payment on both to £661. after 2 years
1. £61,886
2. £63,017

total saving(with the overpayment)of £1,131.

I followed your calculation until the last bit which I've put in bold. Please explain. Thank you.

getmore4less

IT just putting the 27.38 payment onto the cheaper mortgage(rounding both up to the nearest £1) and seeing whats left.

The overpayments of the difference save you another £13 over 2 years.

The key bit is that for a lower rate even though the payment is lower you are paying off more capital every month so you cannot just use the difference in payment to decide which is cheapest.