Including fee in loan: Monthly fee versus 'estimated total cost' confusion

zoothornrollo_2

Hi all. Part of my mortgage is ending at end-November so I'm looking at the loans that are available for me to switch to on their portal and there's one detail on all the products that is confusing me greatly.

That is, when you add the product to the loan the monthly fee is higher, in every case, as you'd expect - makes sense.
BUT in each case the 'Estimated total cost' on the same product is LOWER if you add the fee to the loan, than if you pay it in advance? How does that work?

So in the case of the product I am looking at it says this:

amnblog

No idea who the Lender is or what their website is calculating here, but if you have £ 99,000 mortgage, a £1,495 fee is broadly equivalent to 0.755% on the rate - therefore the no fee rate would need to be above 4.70% to make the £1,495 fee rate useful.

zoothornrollo_2

Thanks amnblog - it's YBS and I tried to speak to a mortgage adviser about this (as their mortgage customer services couldn't answer the question0 but next phone appt is sometime late next week....

gizmo111

zoothornrollo_2 said:

Hi all. Part of my mortgage is ending at end-November so I'm looking at the loans that are available for me to switch to on their portal and there's one detail on all the products that is confusing me greatly.

That is, when you add the product to the loan the monthly fee is higher, in every case, as you'd expect - makes sense.
BUT in each case the 'Estimated total cost' on the same product is LOWER if you add the fee to the loan, than if you pay it in advance? How does that work?

So in the case of the product I am looking at it says this:

Its lower because over the 2 year period you are only paying £9 per month towards the fee, whereas if you pay up front then that is included in the cost of the mortgage over the 2 year period - 24 payments plus 1495. 

amnblog

zoothornrollo_2 said:

Thanks amnblog - it's YBS and I tried to speak to a mortgage adviser about this (as their mortgage customer services couldn't answer the question0 but next phone appt is sometime late next week....

Sorry - you have to wait a week to discuss some simple figures?

zoothornrollo_2

amnblog said:

zoothornrollo_2 said:

Thanks amnblog - it's YBS and I tried to speak to a mortgage adviser about this (as their mortgage customer services couldn't answer the question0 but next phone appt is sometime late next week....

Sorry - you have to wait a week to discuss some simple figures?

Yes indeed! Great isn't it

amnblog

zoothornrollo_2 said:

amnblog said:

zoothornrollo_2 said:

Thanks amnblog - it's YBS and I tried to speak to a mortgage adviser about this (as their mortgage customer services couldn't answer the question0 but next phone appt is sometime late next week....

Sorry - you have to wait a week to discuss some simple figures?

Yes indeed! Great isn't it

The benefits of going direct to Lender