Cut to the chase

JohnBravo

Hi Everyone,

   I have two options on the table:

1. 20yr, 10yrs fixed - 2.59%, 3.99% afterwards, APRC 2.9%, no fee

2. 20yr, 7yrs fixed - 2.24%, 4.49% afterwards, APRC: 3.2%, £450 fee

If I decide to sell in 7-9 years them I absorb the penalty - no problem. I reckon I will be overpaying it on annual basis anyway and perhaps repay it completely in 10-12 years.

I wanted to make Option 2 a 10 yrs fixed with that lender too but the rates have increased in the meantime and currently are over Option 1 so it's not worth it.

Option 2 after fee deduction comes about £133 cheaper per annum, £11 cheaper per month over the course of 7 years so peanuts but on the other hand I could use that money towards something else e.g. insurance but then I am not protected after 7 years.

Option 1
pros: longer fixed rate, lower variable rate, lower APRC, no fee

cons: early repayment charge if selling before 10 years

Option 2

pros: lower initial fixed rate, no early repayment charge if selling after 7 years

cons: fee, no fixed rate after 7 years

Which option should I go for?

P.S.

Regarding ERC one illustration document says 3.0% of the outstanding balance...
on the other illustration it says 3.0% of the amount repaid
Is this the same?

JohnBravo

First I was after Option1 but now I am leaning towards Option2.

Is the ERC in the column: Basis of the Charge
3.0% of the outstanding balance = 3.0% of the amount repaid

This does not look like the same thing but quite opposite
1st - the amount to be repaid,
2nd - the amount already repaid, right?

Or the lender is using some strange wording I mean "3.0% of the amount repaid"

Option1 ERC - 3% of the amount repaid = £2.835 in 2030 - after 8 years

Option2 ERC - 3% of the outstanding balance - £2340 in 2027 - after 5 years so again Option2 looks better.

TheAble

What's the outstanding balance? Also what are the terms for a 5 year fix?

JohnBravo

TheAble said:

What's the outstanding balance? Also what are the terms for a 5 year fix?

The outstanding balance is like 94k but after 7 years it would be 65k without over-payments and 37k if I overpay what I have assumed.

I have not checked the 5yr ones but it would have to be with yet another lender and a fixed rate ~2.00%.