Natwest mortgage rates?

feynman33

Whats your term length?

Paying a fee on a 86k mortgage is pretty much guaranteed to be more expensive for you than the no fee option.

Play with the calculator, you want to use the table to compare your outstanding balance after 5 years as well as the cost over 5 years. And if you have the funds to pay the fee upfront then you also have the option of reducing your mortgage by 1k off the bat when taking the no fee rate, which further impacts the comparison.

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

vienly

feynman33 said:

Whats your term length?

Paying a fee on a 86k mortgage is pretty much guaranteed to be more expensive for you than the no fee option.

Play with the calculator, you want to use the table to compare your outstanding balance after 5 years as well as the cost over 5 years. And if you have the funds to pay the fee upfront then you also have the option of reducing your mortgage by 1k off the bat when taking the no fee rate, which further impacts the comparison.

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

Yes you are correct, I redid the math last night and it turns out the 3.98% option is cheaper than the 3.83% option by around £500 over 5 years, so I've cancelled and reapplied 

vienly

lovemula21 said:

vienly said:

lovemula21 said:

I was asking the OP about their situation in order to offer helpful advice. 

NatWest also have a product transfer for a 5 year fix which is 3.98% without a fee. I was wondering if it was offered here or not because it works out cheaper over the long run. 

They are offering me 5 year fix 3.83% with a £999 upfront fee, borrowing £86k on a property around £450k.
They are also offering what you suggested 5 year fix 3.98% with £0 fee, but I think that works out more expensive as you would be paying 3.83% interest on that additional £999 (extra £191 over 5 years).

So I took whatever was cheapest.

Thanks to replying with the extra info. Glad to see you got the best option for you. 

I find it really interesting seeing how the different options can be best for different circumstances. 👍🏻

I actually worked it out incorrectly, the better option was the 3.98% as I would be saving £500 over the 5 year period 

lovemula21

vienly said:

lovemula21 said:

vienly said:

lovemula21 said:

I was asking the OP about their situation in order to offer helpful advice. 

NatWest also have a product transfer for a 5 year fix which is 3.98% without a fee. I was wondering if it was offered here or not because it works out cheaper over the long run. 

They are offering me 5 year fix 3.83% with a £999 upfront fee, borrowing £86k on a property around £450k.
They are also offering what you suggested 5 year fix 3.98% with £0 fee, but I think that works out more expensive as you would be paying 3.83% interest on that additional £999 (extra £191 over 5 years).

So I took whatever was cheapest.

Thanks to replying with the extra info. Glad to see you got the best option for you. 

I find it really interesting seeing how the different options can be best for different circumstances. 👍🏻

I actually worked it out incorrectly, the better option was the 3.98% as I would be saving £500 over the 5 year period 

Ooo yay 🙌 glad you saved over £500. Better in your pocket than the banks. 🙂

feynman33

vienly said:

feynman33 said:

Whats your term length?

Paying a fee on a 86k mortgage is pretty much guaranteed to be more expensive for you than the no fee option.

Play with the calculator, you want to use the table to compare your outstanding balance after 5 years as well as the cost over 5 years. And if you have the funds to pay the fee upfront then you also have the option of reducing your mortgage by 1k off the bat when taking the no fee rate, which further impacts the comparison.

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

Yes you are correct, I redid the math last night and it turns out the 3.98% option is cheaper than the 3.83% option by around £500 over 5 years, so I've cancelled and reapplied 

Good stuff 

poseidon1

Well done to the posters who successfully guided the OP to the better fee free option for the amount being borrowed.

I am certain many borrowers ( who are not particularly numerate), are drawn to the fee based options  ( like moths to a flame) due to the slightly cheaper headline rate, but without running a critical analysis to compare the slightly higher fee free options which may offer better cost saving outcomes.

superM

I think OP went with a 5-year fixed mortgage with no fee. Would it be better to go for a 2-year fixed with no fee, given the size of his mortgage?

Mortgage interest rates are likely to go down, so in 2 years, rates could be lower than 3.98%, but with a 5-year fix, his rate will remain locked for another 3 years.

At the moment, a 2-year fixed with £30 fee is 4.04%, so the difference isn’t huge.

Emmia

superM said:

I think OP went with a 5-year fixed mortgage with no fee. Would it be better to go for a 2-year fixed with no fee, given the size of his mortgage?

Mortgage interest rates are likely to go down, so in 2 years, rates could be lower than 3.98%, but with a 5-year fix, his rate will remain locked for another 3 years.

At the moment, a 2-year fixed with £30 fee is 4.04%, so the difference isn’t huge.

I think predicting that interest rates will fall or rise is a bit of a mugs game, ultimately if you need a mortgage/remortgage/product switch then you just need to go for the best rate at the time, and once you're locked in, don't keep looking at the rates.

Rates also don't always fall...

When we last renewed our fix I found a low rate with our current lender, my husband was convinced rates would fall further, so we didn't take it... Alas he was wrong. When we really needed to renew, the rate had gone up by about 1%. 

kingstreet

A lower rated product will also have a lower outstanding balance at the end of the fixed period. You need to include this as well as fees and interest in your calculations.

saajan_12

Emmia said:

superM said:

I think OP went with a 5-year fixed mortgage with no fee. Would it be better to go for a 2-year fixed with no fee, given the size of his mortgage?

Mortgage interest rates are likely to go down, so in 2 years, rates could be lower than 3.98%, but with a 5-year fix, his rate will remain locked for another 3 years.

At the moment, a 2-year fixed with £30 fee is 4.04%, so the difference isn’t huge.

I think predicting that interest rates will fall or rise is a bit of a mugs game, ultimately if you need a mortgage/remortgage/product switch then you just need to go for the best rate at the time, and once you're locked in, don't keep looking at the rates.

Rates also don't always fall...

When we last renewed our fix I found a low rate with our current lender, my husband was convinced rates would fall further, so we didn't take it... Alas he was wrong. When we really needed to renew, the rate had gone up by about 1%. 

Yes and no.. IMO the point is that the banks have already done the predicting whether rates will fall or rise and factored that into the different rates. 

So I wouldn't necessarily go for the 'best' rate (assuming you mean 'lowest rate' but apologies if not) but rather the product you need. If on a tight budget and you'd rather certainty for longer, then 5 year fix may be better for you. If likely to move in a couple of years, then a 2 year fix may be optimal (yes you can port but that may reduce your options). 

I do think its not wise for posters to advise the 'best' option based on rate predictions - as you say rates don't always fall and its not nearly (at all) clear cut vs say the fee vs no fee decision.