When it comes to selecting the right mortgage, the lowest interest rate doesn’t always guarantee the best deal. To provide an inside look at how mortgage brokers research and recommend solutions, I’ve compared three different five-year fixed-rate mortgage options. Using a mortgage amount of £200,000 on a property valued at £350,000, I’ve evaluated interest-only deals at 4.99%, 5.09%, and 5.14% (writes Howard Reuben, Principal, HCH Financial Services).
At first glance, you might assume the 4.99% rate is the cheapest option. But let’s dig deeper – you may be surprised!
Breaking down the costs
Mortgage products often include additional fees such as arrangement fees, valuation fees, cash back offers, and more. These can significantly impact the overall cost of a mortgage. Below is a detailed comparison:
Rate | 4.99% | 5.09% | 5.14% |
Arrangement fee | £995.00 | £0.00 | £14,000 |
Booking fee | £185.00 | £0.00 | £0.00 |
Valuation fee | £430.00 | £355.00 | £0.00 |
CHAPS fee | £35.00 | £20.00 | £35.00 |
Other fees | £260.00 | £120.00 | £199.00 |
Cash back | £0.00 | £250.00 | £0.00 |
Initial monthly payment | £889.88 | £852.64 | £856.82 |
True cost (five years). Lender fee not included in the calculation | £54,802.80 | £51,883.40 | £53,821.84 |
The true cost over five years
At first glance, the 4.99% rate might seem like the cheapest option. However, due to some higher fees and lack of free valuation incentives, this deal ends up costing £2,919.40 more than the 5.09% deal over five years.
The 5.09% deal, while it has a slightly higher interest rate, offers better value due to no arrangement fee, cash back, and lower overall costs.
Why work with a professional mortgage adviser?
Navigating the fine print of mortgage products can be overwhelming. By working with a professional mortgage adviser, you can save hundreds – or even thousands – of pounds by identifying the true cost of a mortgage, not just the initial rate.
At HCH Financial Services, we’re dedicated to helping you find the best mortgage solution for your needs. Our professional fees are far lower than the savings we can help you achieve, making our advice an invaluable part of your property journey.
Need help finding the right mortgage?
For personalised advice and tailored mortgage recommendations, contact HCH Financial Services today:
Call: 0333 1234 536
Email: advice@hchfs.com
Let us help you secure the right deal and save money in the process!
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