Fixed mortgage ending soon

markharriers

Hi guys just after some help please.

My current 5 year fixed mortgage deal is coming to an end and would like to fix again for 5 years as I like the peace of mind it brings.

House value is currently £325,000
Currently owe £140,000
Term I want is 23 years.

I have found the following deals

4.19% fixed with no fee
3.99% fixed with fee of £999

So I would save 0.20% Interest if I pay the fee.

I'm trying to get my head round if I should pay the fee as I look at the figure's.

I have done some workings out based on the full 23years length of the mortgage and it showed the interest I would pay as follows..

4.19% mortgage £78,356 
3.99% mortgage £74,146
(Also save £15.26 per month on repayments with the 3.99% deal)

So this clearly shows a fee of £999 would be beneficial but the bit that's confusing me is i would like to work this out over 5 years as after 5 years i will be looking for another deal anyway could someone please advise me how I could do this please 🙏 

Thank you in advance ☺️ 

lfc321

Are you going to pay the fee upfront, or add it to the mortgage?

amnblog

0.20% difference in rate on £140,000 over 5 years is £280 x5 = £1,400

Yes, as you pay the capital off you save a little less, the lower the remaining mortgage term the less you save
Yes, if you add the fee you pay £200 interest on it
Yes, if you pay the fee, you lose savings interest on £999

But you will be ahead by taking the fee rate - not by much

sheenas

So, if it added to the mortgage it's effectively £141,000 @ 3.99%, if you pay it up front then its ((60 x monthly payment) + £999) /60. Mostly like they will be more or less the same.

Hoenir

markharriers said:

I have done some workings out based on the full 23years length of the mortgage and it showed the interest I would pay as follows..

4.19% mortgage £78,356 
3.99% mortgage £74,146
(Also save £15.26 per month on repayments with the 3.99% deal)

This should have no bearing on your thinking. In 5 years time you'll need to select a new mortgage product. 

markharriers

amnblog said:

0.20% difference in rate on £140,000 over 5 years is £280 x5 = £1,400

Yes, as you pay the capital off you save a little less, the lower the remaining mortgage term the less you save
Yes, if you add the fee you pay £200 interest on it
Yes, if you pay the fee, you lose savings interest on £999

But you will be ahead by taking the fee rate - not by much

Thank you.

So looking at how you have put it i would save £400 if I pay the fee separately to the mortgage but putting it on the mortgage would cost me £200 so would save £200 think I have that right lol also I would save an extra £15 per month on the repayment amount on the 3.99% as opposed to the 4.19% one saving me an extra £900? 

Am I correct in thinking as I will doing a 5 year fix im best just working my figures out over 5 years and not the full length of the mortgage?

amnblog

The difference in the monthly payments cannot be added in again. That is reflected in the difference in interest rates

georgehere

"Am I correct in thinking as I will doing a 5 year fix im best just working my figures out over 5 years and not the full length of the mortgage?"

Yes you are correct. The 2 deals are equal over the 5 year period.