Which is cheapest overall?

MF2015

Hi guys,

Could someone better than me with numbers please tell us which are the cheapest 2 and 5 year deals please?

2 year deals.

First direct;

2 Year Fixed Repayment - Fee Saver with 60% LTV and interest rate 1.79% £0 fee


2 Year Fixed Repayment - Standard with 60% LTV and interest rate 1.49% £490 fee



Barclays;

1.91%
2 Year Fixed RewardMore detailsCompare

£0 fee

1.54%
2 Year Fixed RewardMore detailsCompare

Fee £899






5 year deals



First direct;

5 Year Fixed Repayment 1.94% £0 Fee


5 Year Fixed Repayment 1.84% Fee £490



Barclays;

2.19%
5 Year Fixed RewardMore detailsCompare
Fee £0



1.98%
5 Year Fixed RewardMore detailsCompare
Fee £899



The Barclays deals are retention so will let us switch 3 months earlier and enable me to start paying in an extra £500 pm pension that I'm holding off starting but I like the sweep option of overpaying with the First Direct.

Your help is greatly appreciated, many thanks.

OUNN

Crucially, to work out which deal is best we need to know the size of the loan.

Generally, the bigger the loan becomes - the more attractive the lower rate with a fee is.

If the loan isn't that big, avoid the fees all you can!

Tom99

[FONT=Verdana, sans-serif]The First Direct deals will be cheaper than Barclays whatever the loan amount.[/FONT]
[FONT=Verdana, sans-serif]If you ignore the slight decline in interest as you pay a bit off each year:[/FONT]
[FONT=Verdana, sans-serif]
[/FONT]
[FONT=Verdana, sans-serif]2y 1.49% +£490 is better for a loan above £81,667 (490/2/.3%)[/FONT]
[FONT=Verdana, sans-serif]5y 1.94% +£490 is better for a loan above £98,000 (490/5/.1%)[/FONT]
[FONT=Verdana, sans-serif]
[/FONT]
[FONT=Verdana, sans-serif]Below those figures the First Direct deal with £0 fee is cheaper.
[/FONT]

MF2015

Thanks very much for the replies.

The loan amount is for around £240,000.

kingstreet

Outstanding balances when the fixes end?

MF2015

kingstreet wrote: »

Outstanding balances when the fixes end?

That will all depend on how much I overpay or if I edge more into the pension and just pay the minimum repayment.

If I go with the Barclays I will be able to overpay or pay extra pension payments earlier that will have a 40% tax saving.

Tom99

MF2015 wrote: »

Thanks very much for the replies.

The loan amount is for around £240,000.

[FONT=Verdana, sans-serif]The £490 deal will be better then.[/FONT]
[FONT=Verdana, sans-serif]Comparing the 2yr v 5yr, the 2yr will save you about £1,680 in interest over the first 2 yrs so you can afford to pay slightly more than 1.84% for the next three years, about +0.23% so 2.07% to equate the 2/5yr deals.[/FONT]
[FONT=Verdana, sans-serif]That again assumes no reduction in balance outstanding and also that you can remortgage in 2 yrs for free.[/FONT]
[FONT=Verdana, sans-serif]So approx, if you think interest rates will rise by more that about 0.5% over the next 2 yrs the 5yr deal at 1.84% will be better.[/FONT]

MF2015

Tom99 wrote: »

[FONT=Verdana, sans-serif]The £490 deal will be better then.[/FONT]
[FONT=Verdana, sans-serif]Comparing the 2yr v 5yr, the 2yr will save you about £1,680 in interest over the first 2 yrs so you can afford to pay slightly more than 1.84% for the next three years, about +0.23% so 2.07% to equate the 2/5yr deals.[/FONT]
[FONT=Verdana, sans-serif]That again assumes no reduction in balance outstanding and also that you can remortgage in 2 yrs for free.[/FONT]
[FONT=Verdana, sans-serif]So approx, if you think interest rates will rise by more that about 0.5% over the next 2 yrs the 5yr deal at 1.84% will be better.[/FONT]

Thanks for the reply Tom. I do think interest rates will rise by 0.5% in the next 2 years so I’m probably going to go with the 5 year deal.

If it’s not too much trouble would you be able to tell me the saving between the First Direct and Barclays over the 5 years?

If it’s several hundred going the Barclays route would enable me the to save that in tax from extra pension payments starting earlier.

Really appreciate the help everyone.

Tom99

MF2015 wrote: »

If it’s not too much trouble would you be able to tell me the saving between the First Direct and Barclays over the 5 years?

[FONT=Verdana, sans-serif]The Barclays 5 yr will cost about £1,625 more in interest over 5 yrs plus the extra £409 fee upfront so a total of say £2,000 to £2,050[/FONT]

MF2015

:T

Tom99 wrote: »

[FONT=Verdana, sans-serif]The Barclays 5 yr will cost about £1,625 more in interest over 5 yrs plus the extra £409 fee upfront so a total of say £2,000 to £2,050[/FONT]

That’s great, thanks for the help, really appreciate it.

Thrugelmir

Remortgaging comes at a price. Exit fees, legal fees and valuation fees. You'll need to factor these in if the intention is to move to another lender.