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How do I work out which mortgage is best with varying rates and fees?

Last post Wed, Feb 22 2012, 9:58 PM by maxsteam. 1 replies.
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  •  Wed, Feb 22 2012, 9:58 PM

    Re: How do I work out which mortgage is best with varying rates and fees?

    A and B are very similar. The only difference is that, with A, the fee is added to the mortgage and a little more interest will therefor be paid while with B, you pay the fee now and no interest will be added to the £999 (unless you need to borrow to pay the fee). If you borrow £999 to repay at the end of 5 years at 4% interest, then you will need to repay £1169 in 5 years time.

    The difference with C, in money terms, will be about 0.2% of the total, or £200 per year, which, over 5 years, is about the same as the fee. However, this extra will be added to the debt piecemeal over the 5 years rather than on the first day.

    My preference from these options would be C, but the difference is small.

    • Post Points: 5
  •  Tue, Feb 21 2012, 5:29 PM

    How do I work out which mortgage is best with varying rates and fees?

    Hi,

    From the three mortgage options below, how do I work out which one is cheaper in the long run when borrowing say £100k for example..

    Mortgage A

    Interest Rate: 3.99%

    Fee: £999 - Added on to mortgage

    Term: 5yrs

    Mortgage B

    Interest Rate: 3.99%

    Fee: £999 - Paid upfront (So borrowing £100k + £1k = £101k)

    Term: 5yrs

    Mortgage C

    Interest Rate: 4.19%

    Fee : £0

    Term: 5yrs

    Please could someone show me how I can work this out with clear calculations and/or a formula?

    Thanks..
    • Post Points: 20