What makes the best mortgage?

Diego_Francis

Please bare with me, a bit of info to follow here... 

Borrowing: £145k
Deposit: £55k
Offer accepted on house and in process of selling own home. 
All deposit money comes from sale of house. 
Secure financial circumstances. 
Currently shopping around to see what's available to us on the market. All great quotes but it's bugging me as I can't figure out what makes the best mortgage product and it's difficult to ask on here as every situation is unique to the individual however please consider the below as just scenarios to help screw my head on a bit better. 
Currently not with a broker, just got quotes from a few as well as from current bank. 
Got till March before house is ready so in no rush to choose just yet though will be deciding before end of next week to get the ball rolling. 


Below are rounded up figures and scenario based only. 
Mortgage quotes:
Constants: 25yr term. 5yr fixed. 
Bank: 2.3% £1k fees, £610 monthly payments 60months.
Platform: 1.78%, £1.05k fees, £590 monthly payments 63 months
Digital (Atom Bank): 1.94%, £775 fees, £610 monthly payments 60 months.

I have more but I'll keep it simple with those above. 

Now from a glance, digital wins hands down. But this is where I don't understand clearly. 

If the interest rate is lowest, surely that's the better deal to pick?
How I understand it, over 5yrs, how much of your monthly payments is going towards interest? So less is better. I can overpay to a degree but not consistently enough to set up monthly overpayments, therefore could be in a pickle choosing a higher interest rate, though all of them are great at the moment.

Lets use digital to give you an insight to how I'm thinking this through:

Total cost assessment for the 1st year will be: £7475.
Total monthly payments over fixed term including above will come to: £36755.
Interest rate is 1.94%, using mse calculator, total capital repaid comes to: £23,787 (fees added to mortgage in this example) 

Now I'll compare that to Platform, lowest interest offered to us today:
Total cost assessment : £7280
Payments over fixed term: £37370 (£615 more than digital)
Interest rate is 1.78%.
Total capital repaid: £24,270

Summary:
Choosing platform will cost £275 more in startup fees.
Will cost £615 more over the fixed term
Will pay off £483 more from the capital.
Therefore if I picked Platform as its lower interest, its going to cost us £407 more as opposed to choosing digital which will save us £407 even though the Interest higher.

Is this correct? Or have I misinterpreted this information? 
Can you understand why I'm struggling to decide what is the best mortgage product? Ha. 

Sorry for the bad formatting, all been wrote out on mobile.

I know once I've decided on a broker that they'll make this clear to me but I want to be able to grasp a good understanding of this first before talking to a chosen broker to see if I'm able to use my own head instead of just relying solely on what a broker tells me and trusting that advice. (no offence if you are a broker) 

getmore4less

your payments don't look right 
for the £145k over 25years

rate	fees	payment	add fees
2.30%	£1,000.00	£635.99	£640.37
1.78%	£1,005.00	£599.18	£603.33
1.94%	£775.00	£610.36	£613.62

Therefore if I picked Platform as its lower interest, its going to cost us £407 more as opposed to choosing digital which will save us £407 even though the Interest higher.

keep it simple add the fees make the payment the same and see what's left after 5 years(will do it for 60m)

amount	rate	payment	owing
£146,000.00	2.30%	£640.37	£123,097.94
£146,005.00	1.78%	£640.37	£119,431.83
£145,775.00	1.94%	£640.37	£120,297.73

You also get the lower rate a bit longer with Platform.

there are other things to consider like but not limited to.....
what are the no fee rates(£145k is in the range where that needs checking  1.94% no fee  would do it ).
you are in the 75% LTV and in 2 years you  would be under 70% for better rates.
what are the retention deals like, if you get stuck with the lender because finances change.
Are the broker rates better than direct.

Diego_Francis

getmore4less said:

your payments don't look right 
for the £145k over 25years

rate	fees	payment	add fees
2.30%	£1,000.00	£635.99	£640.37
1.78%	£1,005.00	£599.18	£603.33
1.94%	£775.00	£610.36	£613.62

Therefore if I picked Platform as its lower interest, its going to cost us £407 more as opposed to choosing digital which will save us £407 even though the Interest higher.

keep it simple add the fees make the payment the same and see what's left after 5 years(will do it for 60m)

amount	rate	payment	owing
£146,000.00	2.30%	£640.37	£123,097.94
£146,005.00	1.78%	£640.37	£119,431.83
£145,775.00	1.94%	£640.37	£120,297.73

You also get the lower rate a bit longer with Platform.

there are other things to consider like but not limited to.....
what are the no fee rates(£145k is in the range where that needs checking  1.94% no fee  would do it ).
you are in the 75% LTV and in 2 years you  would be under 70% for better rates.
what are the retention deals like, if you get stuck with the lender because finances change.
Are the broker rates better than direct.

Great formatting! 
Okay, now that I've looked, I made the rookie calculation error of factoring in 63 months with the other two as 60 months. That's why I was thinking it'd cost £407 more. 
So lower interest rate is the better one to aim for from this exercise. 

I do have savings to get me onto 70% LTV by end of the year but sods law I'll have to apply before then - valid point there. 

Rentention, as in ERC's? Or something else? 

I believe broker rates will be better. Two of them are quoting as follows: £200 for one(digital) , £500 + cashback from commission(natwest - not added into the above) . 

Thankyou for your clearer input. Much appreciated! 

getmore4less

retention deals those you can get without checks when 5y are up
some lenders are great for new business but less so on the next one.

on the ERC that is one factor I forgot, but if paying the is a risk then smaller can be better of just go shorter term.

if there are things like cashback you can net them into the fee costs when doing the comparisons.

Another factor when rates are low is payments sometime lower rate and longer term might be a bit more expesive but more money to invest elsewhere,  pension often get a mention especially for 40% tax payers.