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Mortgage - maths advice please!

cornish42
Posts: 19 Forumite

Hi everyone,
I seem to be failing at some basic maths here and would appreciate it if anyone could explain please.
I am looking to remortgage. I owe 97k on a house that is worth approx. 275k. My salary is just over 40k. I'm currently with NatWest. The best they are offering me is 1.39% with a 999 fee.
I've used Trussle and Habito at the moment and have had email recommendations from them. I understand that some online calculators (i've look at gocompare, uswitch and a few others) deal differently with any fees and some allow you to compare to prices over 1 year or the whole fixed term (I'm looking at a 5 year fixed).
Currently I've seen 1.14% with 995 fee from TSB, 1.24% with 490 fee from FirstDirect and 1.38% no fee from HSBC.
My question is - is it always best to pay the fee upfront straight away, if you are trying to pay the least amount possible over the intial term of your deal?
I thought it would, but the calculators I've looked at seem to show that adding it to the loan reduces the cost. I don't see how that can be the case as I thought that would be adding the cost of the fee plus the interest over the term. Perhaps it's just the way I'm using the calculators. My plea to Trussle and Habito to explain this for me fell on deaf ears so I'm hoping someone here will be able to help.
Thanks!
I seem to be failing at some basic maths here and would appreciate it if anyone could explain please.
I am looking to remortgage. I owe 97k on a house that is worth approx. 275k. My salary is just over 40k. I'm currently with NatWest. The best they are offering me is 1.39% with a 999 fee.
I've used Trussle and Habito at the moment and have had email recommendations from them. I understand that some online calculators (i've look at gocompare, uswitch and a few others) deal differently with any fees and some allow you to compare to prices over 1 year or the whole fixed term (I'm looking at a 5 year fixed).
Currently I've seen 1.14% with 995 fee from TSB, 1.24% with 490 fee from FirstDirect and 1.38% no fee from HSBC.
My question is - is it always best to pay the fee upfront straight away, if you are trying to pay the least amount possible over the intial term of your deal?
I thought it would, but the calculators I've looked at seem to show that adding it to the loan reduces the cost. I don't see how that can be the case as I thought that would be adding the cost of the fee plus the interest over the term. Perhaps it's just the way I'm using the calculators. My plea to Trussle and Habito to explain this for me fell on deaf ears so I'm hoping someone here will be able to help.
Thanks!
0
Comments
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I don’t know how to explain it but with rough calcs isn’t HSBC 1.38% no-fee free-legals the cheapest hands down for a small 97k mortgage?1
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Also, the MSE mortgage best buy link shows the lowest cost over the first year, not the 5 years. Over 5 years would be more useful to know!0
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cornish42 said:@ukri Haha, thanks! That's what I thought initially, but both Habito and Trussle have both said 1.14 with 995 fee from TSB is the lowest cost over a 5 year fixed.
I've got myself all confused about it!1 -
Most comparing sites do it wrong including MSE.
The rough guide which weeds out the way out options is max saving
For yours £100k 5 years each 0.1% in rate save a max of £500 if you were on interest only
As you will be on repayment you need the payment to do the proper calculations as the savings for the lower rate are less.
Add the fee make the payment the same and see how much is left after 5years.
Paying the fee up front only changes the comparison a small amount, it's just an overpayment.
1 -
cornish42 said:@ukri Haha, thanks! That's what I thought initially, but both Habito and Trussle have both said 1.14 with 995 fee from TSB is the lowest cost over a 5 year fixed.
I've got myself all confused about it!0 -
ukri said:cornish42 said:@ukri Haha, thanks! That's what I thought initially, but both Habito and Trussle have both said 1.14 with 995 fee from TSB is the lowest cost over a 5 year fixed.
I've got myself all confused about it!
I'm still none the wiser though!0 -
ukri said:cornish42 said:@ukri Haha, thanks! That's what I thought initially, but both Habito and Trussle have both said 1.14 with 995 fee from TSB is the lowest cost over a 5 year fixed.
I've got myself all confused about it!0 -
ukri said:cornish42 said:@ukri Haha, thanks! That's what I thought initially, but both Habito and Trussle have both said 1.14 with 995 fee from TSB is the lowest cost over a 5 year fixed.
I've got myself all confused about it!1 -
Ah ok thanks, I'm looking at a 15 year term and hoping to overpay most months.1
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