Am i being thick here

thelakes19

Comparing rates


Halifax rates are 1.95%
Nationwide are 1.99%


Difference 0.04%


On a 500,000 mortgage over the term the difference is £20,000?

kingstreet

It's £200 a year.

However, the lower rate will see more paid off the capital each year.

You haven't told us the term, so you'd better do that bit yourself...

ACG

How long is it 1.95% and 1.99% for?
After possibly 2 years, it will revert to the lenders SVR rates.
What are the difference in fees?

It is never a great idea to look at the cost over the term of the Mortgage as realistically you will not take out the initial deal and sit on the SVR for 25 years where the SVR remains the same throughout.

TrickyDicky101

Hmm, not sure of your maths. How long is the term? On a 25yr mortgage - and assuming the rates stay the same throughout (very unlikely) - I make it a difference of just less than £3000.

If you use a shortform approach like

500k * 0.04% * 25yrs

=£5000

gardner1

thelakes19 wrote: »

Comparing rates


Halifax rates are 1.95%
Nationwide are 1.99%


Difference 0.04%


On a 500,000 mortgage over the term the difference is £20,000?

Are you really planning on staying with same lender for 20/25 yrs

getmore4less

interest only £200py to get to £20,000 100years

Lotak

In terms of cash flow,
Assuming a 25 year mortgage for £500k each (inclusive of all fees), the difference is £9.72 a month (£2,107.12 v £2,116.84), which amounts to £233 over 2 years or £583 over 5 years.

However, after 2 years, the capital balance difference is £158 in lower for the lower rate mortgage, so you're saving £233 cash, + £158 in capital. Over 5, that becomes £583 cash + £357 capital

If the rate was fixed for 25 years, the difference is £2915 (as TrickyDicky said)

For a 20 year mortgage, the difference is £9.46 a month
15 - £9.20
10 - £8.95
05 - £8.75

To conclude:
The impact on monthly payment, relative to the actual monthly payment, is small (less than 0.5% over a 25 year term), but over the fixed period, it does add up and does impact on capital balance. Of course this is if you're really counting your pennies.

thelakes19

kingstreet wrote: »

It's £200 a year.

However, the lower rate will see more paid off the capital each year.

You haven't told us the term, so you'd better do that bit yourself...

Term is 5 year fix

thelakes19

ACG wrote: »

How long is it 1.95% and 1.99% for?
After possibly 2 years, it will revert to the lenders SVR rates.
What are the difference in fees?

It is never a great idea to look at the cost over the term of the Mortgage as realistically you will not take out the initial deal and sit on the SVR for 25 years where the SVR remains the same throughout.

Its for 5 years.

kingstreet

Right.

So the cost difference in interest is £200 a year for each of the five years.

However, you will pay back more of the capital on the lower rate so after five years, you will also owe less.

You need to add the two figures together to establish the overall cost difference.

thelakes19

ACG wrote: »

How long is it 1.95% and 1.99% for?
After possibly 2 years, it will revert to the lenders SVR rates.
What are the difference in fees?

It is never a great idea to look at the cost over the term of the Mortgage as realistically you will not take out the initial deal and sit on the SVR for 25 years where the SVR remains the same throughout.

Over 5 years buddy. Getting stitch-up on break fees as well. Halifax are 400 cheaper on the arrangement fee