Mortgage help please!

[Firstshoes]

We are coming to the end of a 5 year fixed at 1.66%at the end of June. We want to stay with current lender. We are 34% LTV. The current outstanding debt is £89,950 and the term is 12 years. My brain is baffled. We have the option of a 2 year fixed at 4.45 with no fee. A 2 year fixed at 3.98 with a 995 fee we would have to add to the mortgage. A 5 year fixed at 4.2 no fee or a 5 year fixed at 3.98 with 995 fee again added to mortgage. I am still debating on a 2 or 5 year but my main question is are the fee deals better if the fee is added to the mortgage or are the fee free deals better? Help!!!!

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

I've already done the calculation on there but (excuse me if I'm being thick!) the monthly payments are obviously lower with the fee but at the end of the fixed rate period won't my balance be higher with the fee added on?

You have to manually calculate it over the period of time in terms of payment and it also depends if your priority is paying it down as quick as you can or whether your priority is lowered monthly payments

Just divide the fee by however many months the fix is for and add the result onto the monthly payment, to get a rough idea of how expensive each option is.

You can always make an overpayment of that amount each month (if allowed to in the T&C), to avoid having a higher mortgage balance at the end.

Your broker should talk you through this! Speak to them, honestly!

Look at the APR op.

Assuming that you go onto their standard rate at the end of the fix the APR will show you the rate OVERALL including adding the fee to the loan.

The lowest APR is the best one. Though it's up to you how long you choose to fix for, it might be that the short fix is cheaper but uncertain after 2 years, whereas the long fix is more expensive but you have the reassurance that your payments are fixed for 5 years.

First ask your lender to confirm there is a product fee - often there is not if you are remortgaging. If not, I'd not necessarily stay with the same lender if you can get a better rate elsewhere.

Can you afford to pay a product fee upfront? Adding the fee to the mortgage is going to increase the balance you are charged interest on and depending on the fee/balance, it’s usually only beneficial if you have a high mortgage balance. Generally you would always be advised to pay a fee upfront rather than adding so you don’t get charged interest on it, and as someone else has already said for paying upfront - take the difference in monthly payment between fee product and no fee product - times that by the amount of months you are in the product - if this total is less than the product fee it isn’t worth paying

Thank you all so much for making this clearer. I've done the calculation and it's not worth paying the product fee so we've secured a 2 year fix at 4.4. We can swap this right up until the end of June so I'm hoping NatWest lower the rate in the light of the BoE decision last week but I'm not holding my breath!

Generally on a lower mortgage the fee option isn't worth it. On a large value mortgage it can be. Mine is about 115k and it has never been a better deal for us a large fee and a slight smaller APR.

As others said, divide that over 2 years and compare. Or failing that put the details into Cgat GPT and get it to compare and explain it to you