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Unfortunately, I don't have two years of mortgage left, but have an old endowment maturing in sept 17 which will take a big chunk off.
Current deal has expired and best offer from existing lender is 2.49% with no fees or costs involved.
HSBC and Nationwide offer rates nearer 1.3% with various deals but costs are incurred.
I've started on a comparison spreadsheet myself and tried to work out the charge for two years, the minimum term I can get so I'll need to sit on the endowment cheque until March 18 before I can make the overpayment. (Pauls cycles, please sell out of carbon Jekylls by then!!!).
I reckon when I clear the lump off and then look at the market again my LTV will be better so I'm assuming I'll change providers again.
So, to calculate, would you consider 24 monthly payments plus the fee, or just the 24 payments costs, taking the fee as a lifelong costs, or the fee plus the 24 payments divided by 24?
Edit. Reading this back, I'm actually not sure what I am asking here which illustrates my current state of mind on this....
there are many fee free tracker rate remo rates available with no ties so lump sum can be made at any time. Bank of England Governor has stated rates unlikely to rise anytime soon due to World Markets - China's reduced growth rate as one ain indicator recently. Go far a tracker with no ties / ERC's then IF rates increase you can review BUT unlikely to get a fixed rate under two years term with no ERC's.
Struggling to find trackers that are cheap to set up.
The answer depends on the size of your mortgage. Do the lenders have an 'advised service' ? they'll usually calculate the most cost effective mortgage scheme for you as part of that service.
We recently changed our mortgage. All I did was look at the cost of the lower monthly payments + fee [i]vs[/i] higher payments + no fee over the fixed term of the deal. I didn't find a single no fee deal that worked out cheaper over the fixed term. The only way it ends up more expensive is if you intend to sit on the "revert-to" rate until you've paid your mortgage off after the fixed term ends.
There's a tool on the money saving expert website that lets you compare mortgages.
Sounds about right, some of the fees seem high but I think they can be added to the loan amount anyway.
If you're adding the fee then you need to consider the difference over the entire term not over the length of the product. I work with mortgages for a job, get advice, it's there for exactly these reasons.
This is long... Sorry. The above is not fully correct. You need to consider the cheaper rate with fee compared to the higher rate with no fee over term of product and look at the mortgage balance left. This will allow for interest and capital payments made. Depending on the mortgage size depends on the saving made. Do not just look at monthly payment difference between the two times by the length of the deal and considering the product fee to work out the most cost effective. This is a common mistake in the industry and does not allow for the Gross profile interest calculation of the lenders mortgage.
you need to consider the difference over the entire term
I get that, but I fully expect to have a significant amount of mortgage paid off within the 5 years of our current deal and will then go looking for another deal. Unless something drastic happens I would think we'll have a significantly better LTV in 5 years time. Hence my caveat of
The only way it ends up more expensive is if you intend to sit on the "revert-to" rate until you've paid your mortgage off after the fixed term ends.
If I'm looking at this totally wrong then please let me know.
Use this spreadsheet to work out: http://forums.moneysavingexpert.com/showthread.php?t=1157173
Don't even look at revert rates waste of time you will not pay that rate. You need to find a deal you like. See if that lender has a rate with a fee, slightly lower rate, or without a fee, slightly higher rate. Then based on your loan size, repayment method, term, product term. Ask them which is the most cost effective over the TERM OF THE PRODUCT. This is the advice every lender will give you when asked.
Sounds obvious. Total cost over 5 years and just check that you'll owe the same at the end of that 5 years.
Looking at over the length of the loan seems wrong as you say