Help picking mortgage fee or no fee

g0009348

Hello,

I’m struggling to compare these two mortgages.  I have 164k remaining and wanted a 2 year fix as likely to move in the second year.  I can get 3.85% with a £995 fee or 4.19 with no fee.  Which would be the best choice considering will have to add the fee to the mortgage.  After two years would want to have cleared the most from the overall balance.  Thanks

Emmia

g0009348 said:

Hello,

I’m struggling to compare these two mortgages.  I have 164k remaining and wanted a 2 year fix as likely to move in the second year.  I can get 3.85% with a £995 fee or 4.19 with no fee.  Which would be the best choice considering will have to add the fee to the mortgage.  After two years would want to have cleared the most from the overall balance.  Thanks

If you add the fee to the mortgage, your mortgage will always be slightly higher as a result, and you'll pay mortgage interest on the fee too.

Edit: mortgage calculators are available 
https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

feynman33

Exact numbers depend on your term length, but you'll pay less in monthly payments over the 2 years by taking the 3.85 and adding the fee to the mortgage, but your mortgage balance at the end will be higher by a similar amount. 

Play with the calculator above, you're marginaly better off on the 3.85 but so little in it if you favour reducing your balance you might want the 4.19.

amnblog

On that balance the interest saving will not give enough margin to make the fee product of use to you.