Remortgaging arithmetic

s88

Hi. Current deal ends this month, have my redemption figure for 1/12 (£49,464), LTV=58%, and looking for a 2 year fixed.



I've arranged to see a mortgage advisor at TSB tomorrow. I have my eyes on their 2 year fixed @ 2.09%, plus free legal & valuation fees, as well as £150 cashback due to my current account.


A quick check on here has thrown the proverbial spanner in works, some new deals have emerged:
Santander - 1.99% + free legal & valuation fees, + cashback through 123 account.
Nationwide - 1.94% + free valuation fee's + £500 cashback OR free legal fees.


I've also noticed lower interest rates but with product fees (all products above have no product fee) but from what I can tell these are added to the loan, unlike my current deal, which has a separate product fee account gathering no interest.


1. I don't know if I should be considering these or am being blinded by the interest rate, I guess I would have to call up to be certain?
2. How do I work out which deal (three listed above) is the best? With all including some form of cashback, I'm not sure how to factor this into my sums, is there some kind of forumula? It's entirely possible I'm splitting hairs here also, I'm very much aware :rotfl:

Thrugelmir

What's the attraction of a two year fix? Rather than anything longer.

How do the follow on SVR's compare on the products you've highlighted?

KnowledgeIsLife

I am inclined to say Santander but that's because I work there haha the cashback with the others is a one off how much would you earn through the 123 cashback they have a handy calculator to use on the website to check this

getmore4less

Add the fees(cash back is negative fees) make the payments the same and see what's left after 2 year.

Reality is 0.15% on £50k over 2 years is £150. Less on repayment.

Cost of changing lender and inconvenience will swallow most of that.

What's the auto retention zero cost deal zero from your current lender

Rare to find a fee based deal that works out best unless a generous cashback to cover it.



What's the outstanding term or planned payment?
Critical to the calculations.

s88

Thrugelmir wrote: »

What's the attraction of a two year fix? Rather than anything longer.

How do the follow on SVR's compare on the products you've highlighted?

Partner(FTB) and I plan on purchasing a property together, ideally within 2 years, and this gives me the best flexibility for my money, or that's the way I see it.


Follow on SVRs : Santander 4%; TSB 4.24%; NW 4.24%.

KnowledgeIsLife wrote:

I am inclined to say Santander but that's because I work there haha the cashback with the others is a one off how much would you earn through the 123 cashback they have a handy calculator to use on the website to check this

I compared 3 mortgage products (2 with product fees) and the annual cashback amount was £22 p.a, so not a substantial amount compared with the TSB & NW offers - you're bias looks to be irrational

s88

getmore4less wrote: »

Add the fees(cash back is negative fees) make the payments the same and see what's left after 2 year.

Reality is 0.15% on £50k over 2 years is £150. Less on repayment.

Cost of changing lender and inconvenience will swallow most of that.

What's the auto retention zero cost deal zero from your current lender

Rare to find a fee based deal that works out best unless a generous cashback to cover it.

What's the outstanding term or planned payment?
Critical to the calculations.

Sorry, could you elaborate on the first point with an example?



HBOS are offering me 2.79% for a two year fixed, with 25 years left to go. When searching new deals, generally I'm putting in 30 years to bring the payments down so I can allocate more to savings.

getmore4less

Make the starting cash position the same for each deal.
Debt + all fees - all cashback.

Then make the payments the same

All you need to check is which deal gives the lowest debt at the end of the period

If the goal is lowest payment to increase savings then that's a different calculation
If savings are a goal borrow more.

Don't forget there will be other fees not mentioned yet like exit from your current lender.

Post your calculation on how you got your £22pa for your comparison we can see if there are any errors.

s88

getmore4less wrote: »

Make the starting cash position the same for each deal.
Debt + all fees - all cashback.

Then make the payments the same

All you need to check is which deal gives the lowest debt at the end of the period

If the goal is lowest payment to increase savings then that's a different calculation
If savings are a goal borrow more.

Don't forget there will be other fees not mentioned yet like exit from your current lender.

Post your calculation on how you got your £22pa for your comparison we can see if there are any errors.

Are you meaning to use the compare mortgage calculator tool on here? I'm still rather confused, but have results none-the-less. I didn't think they would, but the deals I've seen with product fees are all coming out better compared over the two years, with Santander cheapest, costing £4,157 (not including £40 cashback). quite a hefty ERC though (3% + £200 legal fees), although the idea would be to switch at no charge after deal ends. If taking NWs £500 cashback, it would be cheapest, but then it would be offset with legal fees, which I'm not sure how much would cost.


Having the extra cash available is more just for expendable income, some will go to savings, some to overpayments, and whatever else. The lowest interest rate with the highest product fee seems to get me the cheapest deal over two years - I'm in no real hurry to pay off mortgage, rather reduce casually while increasing savings, investments & pension at same rate.


The cashback figure from Santander was provided by them - I compared 3 of their products and they calculated what I could get per year for each product.

KnowledgeIsLife

Did you only compare the cashback from making the mortgage payments you get cashback on lots of other bills as well which would boost that up use the actual calculator for the 123 bank account there is 2 different types lite i believe is £2 and full is £5 per month don't forget to factor this into your calculations if you use it to pay all your direct debits legal fees vary if they are any unforeseen issues that require more work it costs more don't forget if the booking fee is added to loan you will be charged interest on this and watch out for an account fee from current lender if not already paid which is normally in the region of £200 or so

getmore4less

Don't use MSE calculators they get the wrong answers.

getmore4less

What are the fee/no fee rates?

to recover a fee over two years on £50k needs a decent difference.

For every £100 needs at least 0.1% lower rate