New mortgage deal, help!

[Toddlerteaplease]

Am I better to have a slightly higher interest rate, and no product fee. Or £999 fee that's added to the mortgage and a lower Interest rate.
My feeling is the first option. But I'm not sure if that's the best thing to do. See pic for an illustration of the figures.

The slightly higher interest rate is £480 over the 5 years so yes it is cheaper than the lower interest rate.

That is £480 more over 5 years so less than adding £999 to your mortgage. I would go for option two.

Thanks for working those figures out. I've just been trying to do that. Maths really isn't my strong point.

Both options are still £60 a month cheaper than what I'm already paying.

The options show the fee has been added to the balance, so with that in mind it is cheaper to get the lower rate. If you select not adding the product fee (if you can afford to pay for that now) then your monthly figure will be even lower on that one.

I'm not worried about the monthly cost difference, rather the long term. If the PP is correct the. The slightly higher interest rate actually works out cheaper?

It nearly always works out that the higher interest rate with lower initial fee is cheaper over the term than adding the higher fee to the mortgage.

People usually fall for the lower payments/lower interest rate and the banks make money.

If you’ve no reason to need much lower monthly payments then take the higher rate

www.moneysavingexpert.com/mortgages/compare-mortgage-rates/

Whether to pay the product fee for the lower rate generally depends on how much you are borrowing. On an £80,000 mortgage, a difference in interest rates of 0.2% means £160 per year difference in what is charged so even for a 5 year deal it is a waste of money yo pay for the lower rate. However if you are borrowing £400,000 that becomes a difference of £800 per year so even for a 2 year fix it makes sense to pay a £1000 product fee, and across 5 years it is a massive saving.

Previous poster is correct.

The way to work it out is to multiply your monthly repayment by 60 (number of months on the deal) and add the fee to the sum that it belongs with. In your case that is

481.07x60+999=29,863.2
489.71x60=29,382.6

That also assumed you pay the fee upfront and don't get interest added for that.

The fee deals are really for much higher value mortgages.