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  • FIRST POST
    • Thisisha
    • By Thisisha 13th Jan 19, 2:28 PM
    • 2Posts
    • 1Thanks
    Thisisha
    Mortgage comparison - short term and remaining amount to pay
    • #1
    • 13th Jan 19, 2:28 PM
    Mortgage comparison - short term and remaining amount to pay 13th Jan 19 at 2:28 PM
    Hello,
    Does anyone know how to do the proper calculations to compare two mortgages with different %ages/upfront fees? I see online calculators to do the calculation for how much will be paid for the term of the mortgage, but how do I figure out how much mortgage would be left to pay at the end of the term and therefore which one is best longer term too?

    Details:
    Amount:213,419.69
    Length: 25 years (+ 2 months to be exact!)
    Term: 2 years

    Option 1:
    Rate: 1.54%
    Monthly Repayment (from bank): 850.60
    Upfront fee: 999.00
    Total cost for the term: = (850.60 * 24 months) + 999 upfront fee = 21413.40
    Remaining mortgage after two years= ?

    Option 2:
    Rate: 1.79%
    Monthly Repayment (from bank): 876.00
    Upfront fee: 0
    Total cost for the term: = (876.00 * 24 months) + 0 upfront fee = 21024
    Remaining mortgage after two years= ?

    Thanks for any knowledge sharing, much appreciated :-)
    Tim
Page 1
    • getmore4less
    • By getmore4less 13th Jan 19, 3:38 PM
    • 34,071 Posts
    • 20,651 Thanks
    getmore4less
    • #2
    • 13th Jan 19, 3:38 PM
    • #2
    • 13th Jan 19, 3:38 PM
    Stick the numbers in a simple calculator

    Add fees make the monthly payment the same and see what's left at the end of the fix.

    http://www.whatsthecost.com/mortgage.aspx

    Set to interest only and do it twice.

    Simple interest only check 213* 0.0025 *2 = 1065

    Needs the accurate calculation for repayment.
    Last edited by getmore4less; 13-01-2019 at 3:47 PM.
    • Thisisha
    • By Thisisha 13th Jan 19, 7:47 PM
    • 2 Posts
    • 1 Thanks
    Thisisha
    • #3
    • 13th Jan 19, 7:47 PM
    • #3
    • 13th Jan 19, 7:47 PM
    Thanks for the reply, I had a look at the calculator but I don’t fullly understand how to use it to get to the figures I’m after, nor what the meaning of the calculation you’ve shown is! We would be doing a repayment mortgage. I think I’m looking for a more detailed explanation/example to help me get out of my current ignorance!
    • getmore4less
    • By getmore4less 14th Jan 19, 3:29 AM
    • 34,071 Posts
    • 20,651 Thanks
    getmore4less
    • #4
    • 14th Jan 19, 3:29 AM
    • #4
    • 14th Jan 19, 3:29 AM
    You have 213k of debt the interest rate difference is 0.25% and the period you want to save over is 2 years.

    the max amount you would save over the 2 years is if you pay interest only

    213,000 * 0.0025 ) *2 = 1065.

    With a fee of 999(66 saving paying the fee) these numbers are close and you are on repayment the debt is going down so the savings go down as well

    that calculator only does full years.

    213,419.69 over 25 years amount left in 2 years
    (press on the detail button)

    213,419.69 @ 1.54% 857.56 199,203
    213,419.69 @ 1.79% 882.93 199,635

    425 difference

    for 25y2m i get

    213,419.69 @ 1.54% 852.90 199,316
    213,419.69 @ 1.79% 878.29 199,748

    432 difference.

    That compares to you total payment difference of 389 making paying the fee around 43 better



    Problem is that does not take account of the cash flow 999 up front and 25pm.

    If we set the calculator to interest only and the term to 2 years and the payment to 876(higher of your 2 numbers) then add the 999 fee to the lower rate

    214,418.69 @ 1.54% 876 199,784
    213,419.69 @ 1.79% 876 199,804

    there is 20 difference between the two options after 2 years.

    If you pay the fee up front you can use the lower of your payments

    213,419.69 @ 1.54% 851 199,363
    212,420.69 @ 1.79% 851 199,379

    16 difference

    if you plan to overpay then the number gets smaller to the point where the no fee is better(around 1,130pm)



    You also need to consider what else you could do with a lower payment and adding the fees.

    There are savings account that pay more than the mortgage rate.
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