What to Do? Re-mortgage / End of Fixed Term

Vxs

Hi All,
My 2yr fixed term at 2.09% with Virgin Money comes to an end this July.

I am wondering what the general consensus is with Fixed vs Tracker (Variable) mortgages in this current climate? with Brexit and everything else we surely cant expect interests rates to rise too much? I don't wish to fix any longer than 2 years anyway, but with the options passed to me from Virgin I would be swayed to stay on a Fixed @ 1.74% (Option 2 - 8GKV083)

Please see below table of what Virgin have sent me. Do these look competitive?

I am not good with Maths, so I am wondering if the product fee on option 1 is worth the outlay against the increased interest rate of option 2 with no product fee? anybody able to advise?



Thank you in advance for any opinions or help. Would be much appreciated :)

tlc678910

Hi,
For anyone to calculate whether a product fee for a cheaper mortgage is worthwhile for you they need to know the size of your mortgage and repayment term you would be looking over.
Tlc

Vxs

tlc678910 wrote: »

Hi,
For anyone to calculate whether a product fee for a cheaper mortgage is worthwhile for you they need to know the size of your mortgage and repayment term you would be looking over.
Tlc

Thanks for the reply. The amount left on the Mortgage at the end of June's payment would be 88,938 roughly with July being the 1st payment of a new mortgage with 14yrs left. The initial mortgage was 100k approximately, and the house is worth 180k to 190k roughly if that helps or enters into the equation.

Thanks

Thrugelmir

Vxs wrote: »

I am wondering what the general consensus is with Fixed vs Tracker (Variable) mortgages in this current climate? with Brexit and everything else we surely cant expect interests rates to rise too much?

Interest rates cannot get any lower. There's only one future direction of travel. Any number of factors could influence the long awaited change.

tlc678910

Hi,
I went on MSE "Basic mortgage calculator". Put in your mortgage debt 89k) and term (14 years) and the interest rate advertised to work out:
2 yr fix at 1.44% (with £995 fee) is £585 each month (or £15,035 over 24 months with the fee. )
With no fee at 1.74% the mortgage is £597 each month and £14,328 over 24 months.

So I make it you save £707 paying the fee. Using the same process for the five year fix you only save 275 over the 5 years by paying the fee.

Please check again on a mortgage calculator before relying on my maths! I just used the calculator to fill in your amount owing, term and interest rate to find the monthly payment, i then multiplied by 24 and then add the fee if there is one.

This assumes that you will be paying the fee and not adding it to your mortgage which will make the monthly payments larger.
Tlc

ThePants999

Fee vs non-fee - taking a gross simplification, you're choosing between paying 0.4% of your mortgage amount (i.e. £355) every year, vs paying £995 up front. Not that much in it either way.

getmore4less

You cant just look that the difference in payments or interest that gets the wrong answers.

You have to check the amount owing as well.

Vxs

I appreciate the replies, but it seems I have conflicting answers :undecided ??

getmore4less

If you miss off important parts of the calculations you get the wrong answers,

add the fee and paying £597pm after 2 years

£88,938 @ 1.74% £77,516
£89,933 @ 1.44% £78,032

NO FEE is better by £500

if you add the fee and don't overpay the answers are

£88,938 @ 1.74% £597pm £77,516
£89,933 @ 1.44% £592pm £78,153

If someone says paying the fee up front saves money get them to show their working because it makes a TINY difference if you do a proper comparison.

Vxs

Thanks for the breakdown, getmore4less, nobody has corrected you so hoping this is the answer I was looking for

I am now looking at other lenders who have better interest rates/no product fees, like nationwide:

Would I be better off looking at moving my mortgage? they say NO product fee's are there truly no fee's? I setup my first mortgage with a financial advisor so my overall knowledge of applications for mortgages was dealt with for me.



Would the Nationwide deal be better for me? an easy switch with no fee's?

Any help much appreciated please.

Thank you