How to work out interest difference over 5 years?
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DOn't think so the calculators and spreadsheet both show.@getmore4less, I don't understand where you got your numbers; the payments are not 808 and 795 - I guess you must have made some confusion.
£217,500 30y @ 2.04% £808.28pm
£217,500 30y @ 1.92% £795.25pm@OP, you should be aware that getmore4less likes this approach of making the total payment the same when comparing two mortgages;
It makes a difference if you don't account for the cash flow properly even more when you start ignoring the fees which can be £1k+
By using the mortgage rate(making the payments the same) as your initial investment rate it gives the worst case for how you invest your spare money if you have a lower payment.
Just accounting for the interest gets the wrong answers of what you could be paying when optimised.
If you want to spend the money then you are not just comparing two mortgages you are also comparing the cost of putting different amounts of money into your mortgage.
The reality is most decent lenders paying extra is not an issue
The simple model is if I invest £xxx per month on my mortgage which gives me the smallest debt accounting for any fees.
Makes the comparison very easy with a basic calculator.0 -
My bad, I had calculated for 25 years, not 30!
As for the point of comparing two mortgages assuming you pay the same amount every month, look, you won't convince me and I won't convince you (nor do I have the slightest interest in doing so, to be honest!). I was simply pointing out the difference in approach to the OP.
For example, what I want is to find the cheapest mortgage which meets my needs. The way I budget my finances, every 12 or 18 months I review my finances and then consider whether I can/want to make an overpayment or whether I prefer to use the money in another way (rainy day fund, pension, whatever). This is neither right nor wrong in absolute terms - it is simply how I want to manage my finances. Of course other people will want/need / prefer to do differently.
Look, all I'm saying is that you should be a little less of a taliban in your approach: you have explained how you make this comparison, you have explained why and why it makes a lot of sense to you, but you should be open to accepting that your approach may not be the best for all (e.g. me), just like mine doesn't suit you.
Posters on the forum ask for opinions and advice. Just saying: "this is how I compare mortgages" is less useful than saying: "this is how I compare them, this is why I do it this way, but bear in mind that, based on your circumstances, a different approach might make more sense.0
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