MortgageAnalyser

Want to discover the best mortgage?
Analyse, compare and dissect them here.

Sections

Anything else?

Charges Vs interest rates

Paying more in the way of arrangement fees to get a better interest rate could make your payments less in the short term, but might mean that your mortgage will be larger when the discount expires. Is it worth it? It's not an easy sum to work out but luckily, help is at hand with this mortgage analyzer.

Here is a real life example. Clicking on it will open it up in a new window, so you can refer to it and continue reading this. When comparing mortgages, the better value is highlighted in green and the difference between the two mortgages is shown in brackets after the figures for the second mortgage.

This example was an actual choice I was faced with last time I remortgaged. Scroll down and look at the results. Obviously, the HSBC payments are less but look at the "Discount Period Details" section. After the discounted period, my mortgage amount will be 126.55 higher if I take the HSBC mortgage. This is due to the whopping 1K arrangement fee. Is it worth having the lower payments if I end up owing more? The "Total cost to end" says it is. Although I am worse off after the 2 years are up (owing an extra 126 on the mortgage), over those two years I will have paid 2007.00 less. Even accounting for inflation (in 2 years the "worth" of my payments will have decreased), the inflation-adjusted saving is still 1957.14, making the arrangement fee worth paying and the HSBC mortgage a better deal.

Overpaying the mortgage

Are you are lucky enough to not have every spare penny you earn extracted from your bank account by the demands of children, home improvements and... er..., well children again? If so you might be interested to see how much you can reduce the life of your mortgage by making extra payments. Putting a small amount into the "Extra Payment (monthly)" box in the mortgage analyzer will show you a new section in the results. Here is an example.

Scroll down to the "Effect of Extra Payments" section of the results. With those extra payments, you are paying off the mortgage in 20 years rather than 24. That's got to save a lot of money. In fact it saves you a whopping 23,570.12. Sort of. Remember inflation? As you are knocking off the last 4 years of the repayments, you are knocking off the years when your 886.07 payments are actually worth the least. In 20 years time, that 886.07 will actually only be worth the equivalent of what 522.89 is today. That is why the inflation-adjusted figure is so much less; only 9,666.06 - under half the unadjusted figure. Of course, it's not a trivial sum to be sneezed at and the mortgage millstone is released from your neck 4 years early, but it does put things into perspective.

Is that it?

Yes.

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