Comparing mortgages, saving early repayment fee

Burnsie1983

Hi.

I am a little bit dense when it comes to mortgages, so, as every day is a learning day….

I sold my property in Aug 2020 in order to build up some capital and move to a bigger place. Anyway, then my car broke so I'm about £4k behind where I would have liked to be in an ideal world, but then, it’s not an ideal world!

Anyway, I had to pay an early release charge of £1700 to Nationwide. I will get that back if I buy within 6 months. I already have a DIP from Nationwide.

However, I have found better rates online than Nationwide, but want to make sure I’m doing my maths correctly so see if I’d be better off with a “more expensive” Nationwide mortgage but reclaim my £1700 than I would getting a cheaper mortgage but losing those fees.

To keep it simple (for my benefit), I’m looking at a 2 year fixed. Here’s an example;

virgin money

 £ 582.00 per month

2.256%

 £ 995.00 product fee

 £ 15,000.00 "total" 

4% aprc

 £ 14,963.00 (my calculation based on monthly cost X 24 months + product fee)

NW

 £ 626.27

2.99

 £ 999.00

 £ 15,030.48

3.60%

 £ 16,029.48 total as per above 

The “total” field is calculated as monthly cost x 25 months + product fee

It works out that Virgin is just over £1k cheaper, and thus I should “stick” with Nationwide.

I am aware that going for a longer fixed would mean I could save it on another product, but just wanted to make sure I am doing the correct type of maths.

Thanks.

getmore4less

You can't just use the monthly cost and fees to work out which is best that gets the wrong answers

You have to look at balance remaining as well. 

Easiest way is add the fees make the monthly payment the same and run it through a calculator. 

Burnsie1983

getmore4less said:

You can't just use the monthly cost and fees to work out which is best that gets the wrong answers

You have to look at balance remaining as well. 

Easiest way is add the fees make the monthly payment the same and run it through a calculator. 

Thanks. That's why I was thinking I was wrong as I could have paid more capital off in one of the other, that's the main thing