Re-mortgage advice

getmore4less

Should have added by using the same payment (especially if planning to overpay)

Reduces some of the anomalies due to rounding payments.

Eliminates the extra calculation for what happens to the difference in payments

Makes the comparison on the same cash flow

Makes the result based on the single debt left numbers

Once you have that as a base line you can consider other options like lower payment  to allow for extra savings at higher than the mortgage rate

be that savers, pension S&S ISA etc.

adonis10

getmore4less said:

Should have added by using the same payment (especially if planning to overpay)

Reduces some of the anomalies due to rounding payments.

Eliminates the extra calculation for what happens to the difference in payments

Makes the comparison on the same cash flow

Makes the result based on the single debt left numbers

Once you have that as a base line you can consider other options like lower payment  to allow for extra savings at higher than the mortgage rate

be that savers, pension S&S ISA etc.

Thanks, makes sense.

I think we’re going into the minutiae here as essentially I need to know what is the best option out of the two, financially. If the balance is the same at the end, have I paid less over 5 years? Seems like the fee option is slightly better but there’s not a huge difference overall. Would you agree?

getmore4less

Depends what you think is not a lot you are sitting around £450 better off over 61months) with the fee

amount	rate	payment	owing
£130,499.00	1.09%	£615.41	£99,348.68
£129,500.00	1.34%	£615.41	£99,797.37

but if you overpay that goes down,  smaller  regular not by much

amount	rate	payment	owing
£130,499.00	1.09%	£800.00	£87,776.46
£129,500.00	1.34%	£800.00	£88,151.92

down to ~£375

£1,000  ~£300
£1,745  ~£0

break even by term(payment) for the 0.25% difference with £999 fee

term	size needed
5	£158,461.62
10	£106,958.67
15	£96,474.93
20	£91,967.64
25	£89,462.77
30	£87,870.39
IO	£82,153.88

large overpayments could swing it back to the no fee.

unless planning massive overpayments you stay on the side of pay the fee take the lower rate.


Your spreadsheet still looks to be out by quite a bit more the month length difference would give against standard amortization

adonis10

getmore4less said:

Depends what you think is not a lot you are sitting around £450 better off over 61months) with the fee

amount	rate	payment	owing
£130,499.00	1.09%	£615.41	£99,348.68
£129,500.00	1.34%	£615.41	£99,797.37

but if you overpay that goes down,  smaller  regular not by much

amount	rate	payment	owing
£130,499.00	1.09%	£800.00	£87,776.46
£129,500.00	1.34%	£800.00	£88,151.92

down to ~£375

£1,000  ~£300
£1,745  ~£0

break even by term(payment) for the 0.25% difference with £999 fee

term	size needed
5	£158,461.62
10	£106,958.67
15	£96,474.93
20	£91,967.64
25	£89,462.77
30	£87,870.39
IO	£82,153.88

large overpayments could swing it back to the no fee.

unless planning massive overpayments you stay on the side of pay the fee take the lower rate.


Your spreadsheet still looks to be out by quite a bit more the month length difference would give against standard amortization

Well yes but £450 is hardly a lot but it is £7.38 a month that I'd rather have than not. For me it is a simple cost benefit analysis - am I better off by taking the fee option? If yes, I go with that. I say that because overpayments won't be large, £50-£100 here and there and not every month.

I can't make it as accurate as it would be when factoring in exact repayment dates (factoring in BH's etc.) so may amend it to be 12 equal interest amounts to try to smooth this out a bit.

adonis10

       
Update - checked the mortgage rates and repayments online and they are slightly different to what I was told over the phone - frustrating. £601.40 for fee and £615.99 for no fee. 

So with flat amortisation I owe £466 more with the fee but have saved £889.99 over the term by paying less each month. Sounds worth it to me. I could pay that £889.99 at the end of the term and effectively owe £424 less.

getmore4less

You could use the length of month but your previous one looked to have errors as the interest numbers did not look right for lenth of month on the no fee, you would expect similar dips to the fee based. 

With a regular 12th month  amortization you can just use the built in functions.

issue now is the payment look wrong for the 1.09% with the fee added over 20years should be closer to £605.

adonis10

getmore4less said:

You could use the length of month but your previous one looked to have errors as the interest numbers did not look right for lenth of month on the no fee, you would expect similar dips to the fee based. 

With a regular 12th month  amortization you can just use the built in functions.

issue now is the payment look wrong for the 1.09% with the fee added over 20years should be closer to £605.

Ok, that's fine. Getting a little bit too scientific, I think.

Which built in functions are you referring to?

I checked yesterday and the payment for the 1.09% mortgage is £601.40.

getmore4less

The financial function for doing amortization, 

There are only 4 main variables , amount, payments, rate, term you can work with any 3

The main function to do most things

PMT  payment for amount, rate and full term
FV  amount outstanding at any date in the future.
CUMIPMT interest for any period.