Worth paying the mortgage fee? laurieballard87

#1
Hi



So we are due to remortgage for the first time since buying our house, currently on a 5% deal due to 95% help to buy.



Virgin Money seem to be doing good deals, the cheapest 2 year option with the £995 fee would bring our mortgage down £380 a month!



Anyway, the different between the 2 year fixed with a fee is £39 a month to the 2 year fixed without a fee. I make this £936 over 2 years so financially I am better off not paying the £995 fee as its cheaper not to bother?



I am umming and ahhing about going onto a 5 year deal but this works out £100pm without the fee and an extra £21pm with the fee.



Financially if we took the 5 year, I would pay the £995 as I would save a decent amount but on the 2 year, the math doesn't make it worth it.



Unless I am missing something?



Ta

#2
196 views and no replies.



Surely this is a fairly simple question?



Its just about the numbers right?



I have no interest in paying a mortgage broker for something as simple as a re-mortgage, I just want to confirm my thoughts were correct.

#3
No. You need to know how much would be outstanding at the end of the fix and take that into account as well as the rate/interest and fees.

#5
On the 2 year fixed.



Value is £265k

Borrowing £208.5k



£995 fee at 1.68% initial followed by 4.54% standard variable. This is £910 per month.



Non fee is 2.08%, same variable and £949 per month.



The variable is 4.45% and even if rates rise say 0.5%, I would still be able to remortgage 2 years time and would still be cheaper than that variable they are offering.



If the variable is the same after the 2 years then surely the comparison financially is between the two initial values?



If the variable was say 3% ish and rates went up a little in the mean time, I may want to stay on the deal after the two years but I still think I will be better off remortgaging in two years again for a better deal.

#6
If you take the 2 year deal with or without the fee then please overpay as much as possible over the next 2 years.

Your Loan To Value could be 90/85 or even 75% if you overpay every month !

#7
Financially if we took the 5 year, I would pay the £995 as I would save a decent amount but on the 2 year, the math doesn't make it worth it.



what maths are you doing?



If the variable is the same after the 2 years then surely the comparison financially is between the two initial values?



it is and the result is



2y fix owing after 2 years

£208,500 @ 2.09% £949pm £194,154.05

£209,495 @ 1.68% £949pm £193,502.05



around £650 better off paying the fee.



if you want to just pay the fee and pay the normal amount based on 23y term



amount -rate -payment -owing -interest -total cost(with fee)

£208,500.00 1.68% £911.28 £193,393.01 £6,763.80 £7,758.80

£208,500.00 2.09% £952.14 £194,077.17 £8,428.52 £8,428.52

#8



196 views and no replies.



Surely this is a fairly simple question?



Its just about the numbers right?



I have no interest in paying a mortgage broker for something as simple as a re-mortgage, I just want to confirm my thoughts were correct.
Originally posted by laurieballard87


when you don't understand how mortgages work it could be money well spent.

#10
Woops did 2.09% not 2.08% will fix when I get home.



edit



2y fix owing after 2 years

£208,500 @ 2.08% £949pm £194,113

£209,495 @ 1.68% £949pm £193,502



still over £600

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