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• FIRST POST
• chelseablue
• 3rd Oct 17, 10:43 AM
• 2,419Posts
• 2,889Thanks
chelseablue
Fix isn't up until March but starting to look around at rates.

Currently with Halifax, on 1.49%. Current balance is £220,000 and the monthly payment is £720

Halifax are offering 1.59% to switch to a new deal with them, monthly payment would increase to £760

Looking at the Best Buy tables, we could move it to Santander where the rate would be 1.09% and monthly payment of £710
Although the product fee is £1,499

Obviously the benefit of staying with Halifax is not much hassle and no fees

Is the general consensus to go with the lowest rate possible on our size loan, even with a high fee?
Mortgage starting balance £231,000
Mortgage after Year 1 £225,000
Mortgage after Year 2 £218,000
Page 1
• wacky75
• By wacky75 3rd Oct 17, 12:32 PM
• 16 Posts
• 14 Thanks
wacky75
you need to add the fee to the term of the mortgage, then divide by the term.

e.g. if this a 2 year term, 1499 / 24 = 62.46 (+710) = 772.46 per month
• chelseablue
• 3rd Oct 17, 12:58 PM
• 2,419 Posts
• 2,889 Thanks
chelseablue
you need to add the fee to the term of the mortgage, then divide by the term.

e.g. if this a 2 year term, 1499 / 24 = 62.46 (+710) = 772.46 per month
Originally posted by wacky75
Thank you! Never thought of doing that calculation

Yes it is a 2 year rate, so in the example I used we would actually be better of staying with Halifax.

So what I really need to find is a lower rate with no fee? Or a fee that makes the monthly figure over the 2 years less than £760 a month.

Because if we re-fix every 2 years the fees soon add up!
Mortgage starting balance £231,000
Mortgage after Year 1 £225,000
Mortgage after Year 2 £218,000
• AnotherJoe
• 3rd Oct 17, 1:41 PM
• 9,605 Posts
• 10,683 Thanks
AnotherJoe
I dont think you can just do that calculation. Dont you also need to know how much is owing at the end of the 2 year term?
• Lokolo
• By Lokolo 3rd Oct 17, 1:57 PM
• 19,991 Posts
• 15,120 Thanks
Lokolo
A very basic example as I am not counting the reduction of the capital. But if you are using the same term, this won't make a difference.

Halifax interest over 2 years is £6,996
Santander interest over 2 years is £4,796. Add the product fee. Total is £6,295.

Therefore over 2 years you would save ~£700 by moving to Santander assuming no other costs.
• Tammykitty
• 3rd Oct 17, 2:01 PM
• 579 Posts
• 1,208 Thanks
Tammykitty
https://www.moneysavingexpert.com/mortgages/compare-mortgage-rates

A calculator which shows how much you will pay, and the mortgage left at the end of the period
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• getmore4less
• 3rd Oct 17, 2:08 PM
• 32,185 Posts
• 19,344 Thanks
getmore4less
Fix isn't up until March but starting to look around at rates.

Currently with Halifax, on 1.49%. Current balance is £220,000 and the monthly payment is £720

Halifax are offering 1.59% to switch to a new deal with them, monthly payment would increase to £760

Looking at the Best Buy tables, we could move it to Santander where the rate would be 1.09% and monthly payment of £710
Although the product fee is £1,499

Obviously the benefit of staying with Halifax is not much hassle and no fees

Is the general consensus to go with the lowest rate possible on our size loan, even with a high fee?
Originally posted by chelseablue
add the fees make the payment the same see what's left at the end of the promotional period

a rough calculation is to use interest only and see the saving in interest

0.0159-0.0109*220,000= £1100py so after 2y about £700 saved

it will be a bit less as you ere on repayment and that does not take account of the fees but not by a lot.

eg after 2 years
£220,000 @ 1.59% £760pm £208,583
£221,499 @ 1.09% £760pm £207,947

£616 saving.
• getmore4less
• 3rd Oct 17, 2:10 PM
• 32,185 Posts
• 19,344 Thanks
getmore4less
you need to add the fee to the term of the mortgage, then divide by the term.

e.g. if this a 2 year term, 1499 / 24 = 62.46 (+710) = 772.46 per month
Originally posted by wacky75
that does not work as it implies the fee based is more expensive when it's not..

lower rate pays off more capital
• amnblog
• By amnblog 3rd Oct 17, 9:03 PM
• 10,551 Posts
• 4,172 Thanks
amnblog
Have you also considered the 1.24% Halifax rate with the £999 product fee?
I am a Mortgage Broker

You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
• getmore4less
• 4th Oct 17, 4:52 AM
• 32,185 Posts
• 19,344 Thanks
getmore4less
eg. after 2 years
£220,000 @ 1.59% £760pm £208,583
£221,499 @ 1.09% £760pm £207,947

£220,999 @ 1.24% £760pm £208,087

£130 more but easy switch and no risk of other costs(like the exit fee).
• chelseablue
• 4th Oct 17, 9:04 AM
• 2,419 Posts
• 2,889 Thanks
chelseablue
Have you also considered the 1.24% Halifax rate with the £999 product fee?
Originally posted by amnblog
Is that just for new customers?
Mortgage starting balance £231,000
Mortgage after Year 1 £225,000
Mortgage after Year 2 £218,000
• chelseablue
• 4th Oct 17, 9:07 AM
• 2,419 Posts
• 2,889 Thanks
chelseablue
Now I'm even more confused

So, I need to work out how much we would owe at the end of the 2 years and the one that takes the most off the balance is the one to go for?
Mortgage starting balance £231,000
Mortgage after Year 1 £225,000
Mortgage after Year 2 £218,000
• getmore4less
• 4th Oct 17, 11:12 AM
• 32,185 Posts
• 19,344 Thanks
getmore4less
Now I'm even more confused

So, I need to work out how much we would owe at the end of the 2 years and the one that takes the most off the balance is the one to go for?
Originally posted by chelseablue
A lower rate pays of the capital quicker than a higher rate so you have to account for that.

You need to compare the starting point, the end point and the cashflow

For a given amount of your real money which one reduces the debt the most.

easiest way to do this is make the starting point the same with zero cash difference by adding the fees, or if you pay them a smaller debt on the no/lower fee deal.
(some say paying the fees up front is better, for this comparison the difference is very small and reduces the savings as you are just borrowing less*)

Then you have the monthly payment, make them the same and you don't have to account for the difference in payments, if planning to overpay use that amount.

Then see how much is left at the end, lower is better
.........

That the straight financial difference on the deals you then have the other factors

You want a lower monthly payment.
The rates are so low you should be saving any surplus.
If different lenders there may be other fees and different follow on rates to consider
.........

* pay the fees or not
£220,000 @ 1.59% £760pm £208,583
£221,499 @ 1.09% £760pm £207,947
£636
pay the fees
£218,501 @ 1.59% £760pm £207,036
£220,000 @ 1.09% £760pm £206,415
£621
• chelseablue
• 4th Oct 17, 11:24 AM
• 2,419 Posts
• 2,889 Thanks
chelseablue
Thank you very much, we're planning to overpay by at least £500 a month from the summer.

Was just looking at First Direct who are offering a 5 year fix at 1.74% booking fee is £725
As they allow unlimited overpayments, we can then pay off as much as possible in 5 years and look at moving house.

Never though of a 5 year fix before as I thought rates would not be worth considering, was pleasantly surprised. Also saves the hassle of switching every 2 years
Mortgage starting balance £231,000
Mortgage after Year 1 £225,000
Mortgage after Year 2 £218,000