Mortgage Set Up Fees

[Freaki Li Cuatre]

Confused about this, was wondering if any of our mortgage experts could shed some light.

I'm trying to work out how much a 2 year fixed rate mortgage is going to cost me but I don't know how to factor in the set up fee. I'm not going to pay it up front so want it added to the mortgage.

I'm assuming I pay back the full amount of the fee at the same interest rate as the mortgage over the 2 year period?

[The Spartan]

Confused about this, was wondering if any of our mortgage experts could shed some light.

I'm trying to work out how much a 2 year fixed rate mortgage is going to cost me but I don't know how to factor in the set up fee. I'm not going to pay it up front so want it added to the mortgage.

I'm assuming I pay back the full amount of the fee at the same interest rate as the mortgage over the 2 year period?

If you don't pay it up front you can have it added to the mortgage, fees vary from deal to deal and it also depends on what Bank/BS is providing the mortgage.

[Smartie]

Confused about this, was wondering if any of our mortgage experts could shed some light.

I'm trying to work out how much a 2 year fixed rate mortgage is going to cost me but I don't know how to factor in the set up fee. I'm not going to pay it up front so want it added to the mortgage.

I'm assuming I pay back the full amount of the fee at the same interest rate as the mortgage over the 2 year period?

If you don't pay it up front, it's added to your mortgage and you pay it via your normal mortgage payments. It's not paid off over the 2 years but over the full term of your mortgage - best to pay it up front if you have the means.

There are a load of phone apps and online mortgage calculators that you can find to make working all this out easy.

[Freaki Li Cuatre]

If you don't pay it up front, it's added to your mortgage and you pay it via your normal mortgage payments. It's not paid off over the 2 years but over the full term of your mortgage - best to pay it up front if you have the means.

There are a load of phone apps and online mortgage calculators that you can find to make working all this out easy.

Oh ok, so if I remortgage every 2 years I'm going to keep topping it up with the cost of the fee if I go down that route.

Anyone know how the capital part of the repayment is worked out? I'd like to know the formula so I can stick a spreadsheet together. The online calculators I've seen are a bit black box.

[TheCyclingProgrammer]

Oh ok, so if I remortgage every 2 years I'm going to keep topping it up with the cost of the fee if I go down that route.

Anyone know how the capital part of the repayment is worked out? I'd like to know the formula so I can stick a spreadsheet together. The online calculators I've seen are a bit black box.

Most spreadsheets (well, Excel and Numbers anyway) should have functions for calculating what you need. Look at the PMT and FV functions.

If you're comparing mortgages over a fixed period, say 2 years, then you need to calculate the interest over that period + any admin charges, setup fees, booking fees etc.

I can share a spreadsheet you can use but it's in Numbers for OSX format. I can try exporting it in Excel format if you like.

I think my mortgage advisor recommended adding the booking fee to the mortgage, then paying it off immediately on completion, but I can't quite remember what the reason was.

[TheCyclingProgrammer]

I have no idea how well this will come out in Excel:
https://dl.dropboxusercontent.com/u/...mparisons.xlsx

I've left a couple of rows in as an example. You'll need to adjust the variables for yourself.

[Mark McBurney@CMME]

Most spreadsheets (well, Excel and Numbers anyway) should have functions for calculating what you need. Look at the PMT and FV functions.

If you're comparing mortgages over a fixed period, say 2 years, then you need to calculate the interest over that period + any admin charges, setup fees, booking fees etc.

I can share a spreadsheet you can use but it's in Numbers for OSX format. I can try exporting it in Excel format if you like.

I think my mortgage advisor recommended adding the booking fee to the mortgage, then paying it off immediately on completion, but I can't quite remember what the reason was.

1. To cut down initial moving costs

2. You only ever add the fee at the point that you 'get the keys'. The arrangement fee is refundable if for any reason you don't take up the mortgage, however getting it back from the lender could be a hassle, and adding the fee initially negates that.

[TheCyclingProgrammer]

2. You only ever add the fee at the point that you 'get the keys'. The arrangement fee is refundable if for any reason you don't take up the mortgage, however getting it back from the lender could be a hassle, and adding the fee initially negates that.

Right, that's it. I thought it was something like that but couldn't quite remember. Thanks.

[Freaki Li Cuatre]

I have no idea how well this will come out in Excel:
https://dl.dropboxusercontent.com/u/...mparisons.xlsx

I've left a couple of rows in as an example. You'll need to adjust the variables for yourself.

Fantastic, thanks for that. I haven't looked yet as I can't download until I get home. Sure it's better than the pigs ear of an effort I made!

Incidentally, does it work out the capital repayment (however that's done) as well as the interest? That's the bit I was struggling with.

[TheCyclingProgrammer]

Fantastic, thanks for that. I haven't looked yet as I can't download until I get home. Sure it's better than the pigs ear of an effort I made!

Incidentally, does it work out the capital repayment (however that's done) as well as the interest? That's the bit I was struggling with.

It works out:

* Total cost of fees (admin, transfer fees, booking and arrangement fees and valuation)
* Monthly payment
* Mortgage balance at the end of each year (it supports 2 - 5 year fixes)
* Total equity after 2 or 5 years (initial deposit + capital repayments)
* Total cost over fixed period (interest + fees)

If the mortgage deal has any kind of cash back or incentive, stick it in admin fees as a negative amount.

When comparing, I was mainly interested in the total cost over the fixed period - up front costs were not an issue as we've budgeted for them however if you haven't then take this into consideration. The cheapest deal might not necessarily be the cheapest monthly payment either but the range is small so shouldn't really make a big difference to your decision IMO.