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Santander 2 year fixed rate online exclusive mortgage - 1.35%, 60% LTV (£999 fee)
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Santander 2 year fixed rate online exclusive mortgage - 1.35%, 60% LTV (£999 fee)

40
Posted 28th Jun
Currently the market's lowest priced 2 year fixed deal I could find for a loan size of £160K or more over 25 years. A standard valuation and standard legal fees are included although there is an additional £225 fee to factor in for 'exit'.

The 5 year fixed deal of 1.75 seems to be a good rate in the present market for those after a longer fix period.

Also for those with a Santander 123 account you get an additional 1% cashback on monthly repayments up to the value of £10 per month.
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Mars10428/06/2019 14:58

Hot 🔥. I recommend this calculator to compare cost over the deal period …Hot 🔥. I recommend this calculator to compare cost over the deal period (view in desktop mode) https://www.thisismoney.co.uk/money/mortgageshome/article-1633400/Mortgage-calculator-Compare-true-cost-rates-fees.htmlE.g <= 185k over 25years hsbc's fee saver at 1.74 would beat this over the deal period


Do be careful with some of the mortgage calculators though as they only show part of the picture - in this example the calculator shows the 'Cost over deal period including fees' and shows the 1.74% rate with zero fees as 'costing' ~£430 less for a £185K loan.

However what it doesn't show is that proportionally more of the monthly payment is made up of interest. You can use this simple mortgage calculator and look at the interest portion to see how much of your monthly payment goes on interest and the amount on capital repayment. So while with the 1.74% deal you have paid out £430 less in total, in actual fact even taking into account the fees for the 1.35% deal on top of the interest payments you end up paying more in finance costs and have a bigger outstanding loan at the end of period.

Rough example for a 185K loan over the 2 year period:
1.35% - Monthly interest payment £200 x 24 = £4800 + £1250 fees (£999+ £250 exit) = £6050 purely in interest/fees to the bank. Capital repayment is monthly mortgage cost £730 - proportion of that which is interest £200 = £530 x 24 = £12720

1.74% - Monthly interest payment £260 x 24 = £6240 + £0 fees = £6240 purely in interest/fees to the bank. Capital repayment is monthly mortgage cost £760 - proportion of that which is interest £260 = £500 x 24 = £12000

So yes the 1.74% means you have paid out £430 less over the period however in actual fact you would have spent more of the money that you have paid out in interest and less into capital repayment.

However the general point you make here is it does depend on the loan size as to how much of a difference the interest rate makes versus the additional fees. With these 2 particular mortgage deals around £160,000 is the tipping point for where the additional interest payments become more than the lower interest rate.
Edited by: "fastenough" 28th Jun
Cold......Fake APR offset by the product fee,£999 over the 2 years adds £41pm to the overall cost which would make a higher APR rate with no fee cheaper.....
Edited by: "chridt" 28th Jun
fishtastic28/06/2019 17:09

Whether a no fee would be cheaper would depend on what the no fee deal's …Whether a no fee would be cheaper would depend on what the no fee deal's APR was and the size of the mortgage needed. It isn't as cut and dried as you suggest.


Couldn’t agree more. I love it when a mortgage deal pops up and people who have no idea vote cold because there is a product fee attached.

More importantly, they misinform the hukd community.
They'll be paying people to take out a mortgage soon. Can't let those house prices fall....
40 Comments
Hot 🔥. I recommend this calculator to compare cost over the deal period (view in desktop mode) thisismoney.co.uk/mon…tml

E.g <= 185k over 25years hsbc's fee saver at 1.74 would beat this over the deal period
Edited by: "Mars104" 28th Jun
Seems a good % for 2 years
Cold......Fake APR offset by the product fee,£999 over the 2 years adds £41pm to the overall cost which would make a higher APR rate with no fee cheaper.....
Edited by: "chridt" 28th Jun
Mars10428/06/2019 14:58

Hot 🔥. I recommend this calculator to compare cost over the deal period …Hot 🔥. I recommend this calculator to compare cost over the deal period (view in desktop mode) https://www.thisismoney.co.uk/money/mortgageshome/article-1633400/Mortgage-calculator-Compare-true-cost-rates-fees.htmlE.g <= 185k over 25years hsbc's fee saver at 1.74 would beat this over the deal period


Do be careful with some of the mortgage calculators though as they only show part of the picture - in this example the calculator shows the 'Cost over deal period including fees' and shows the 1.74% rate with zero fees as 'costing' ~£430 less for a £185K loan.

However what it doesn't show is that proportionally more of the monthly payment is made up of interest. You can use this simple mortgage calculator and look at the interest portion to see how much of your monthly payment goes on interest and the amount on capital repayment. So while with the 1.74% deal you have paid out £430 less in total, in actual fact even taking into account the fees for the 1.35% deal on top of the interest payments you end up paying more in finance costs and have a bigger outstanding loan at the end of period.

Rough example for a 185K loan over the 2 year period:
1.35% - Monthly interest payment £200 x 24 = £4800 + £1250 fees (£999+ £250 exit) = £6050 purely in interest/fees to the bank. Capital repayment is monthly mortgage cost £730 - proportion of that which is interest £200 = £530 x 24 = £12720

1.74% - Monthly interest payment £260 x 24 = £6240 + £0 fees = £6240 purely in interest/fees to the bank. Capital repayment is monthly mortgage cost £760 - proportion of that which is interest £260 = £500 x 24 = £12000

So yes the 1.74% means you have paid out £430 less over the period however in actual fact you would have spent more of the money that you have paid out in interest and less into capital repayment.

However the general point you make here is it does depend on the loan size as to how much of a difference the interest rate makes versus the additional fees. With these 2 particular mortgage deals around £160,000 is the tipping point for where the additional interest payments become more than the lower interest rate.
Edited by: "fastenough" 28th Jun
They'll be paying people to take out a mortgage soon. Can't let those house prices fall....
chridt28/06/2019 15:25

Cold......Fake APR offset by the product fee,£999 over the 2 years adds …Cold......Fake APR offset by the product fee,£999 over the 2 years adds £41pm to the overall cost which would make a higher APR rate with no fee cheaper.....


Whether a no fee would be cheaper would depend on what the no fee deal's APR was and the size of the mortgage needed. It isn't as cut and dried as you suggest.
When comparing lower rate + fee vs higher rate with no fee, it’s worth triple checking the duration. In some cases (particularly when remortgaging) its not exactly 24 months, it can be ~1-3 months more. Also, most lenders will let you move to a new deal with them once your within your last 4 months of the fixed rate which also changes the calculations when working out what’s more cost effective over the term.
fishtastic28/06/2019 17:09

Whether a no fee would be cheaper would depend on what the no fee deal's …Whether a no fee would be cheaper would depend on what the no fee deal's APR was and the size of the mortgage needed. It isn't as cut and dried as you suggest.


Couldn’t agree more. I love it when a mortgage deal pops up and people who have no idea vote cold because there is a product fee attached.

More importantly, they misinform the hukd community.
does anyone know if you stand a chance of getting this over 35 years? due to take out a £400k mortgage and the rate will drop payments by £100 per month.
Jayden12328/06/2019 21:53

does anyone know if you stand a chance of getting this over 35 years? due …does anyone know if you stand a chance of getting this over 35 years? due to take out a £400k mortgage and the rate will drop payments by £100 per month.


I am going through the application process and did notice they would only provide a maximum term that would mean the mortgage was fully repaid before my stated retirement age. Just one factor to consider.
fastenough28/06/2019 22:47

I am going through the application process and did notice they would only …I am going through the application process and did notice they would only provide a maximum term that would mean the mortgage was fully repaid before my stated retirement age. Just one factor to consider.


I’m 28 so mortgage would be paid by 63 on those terms, should be okay hopefully? I’d shorten the term later on in life I just happen to have a strong pension and great interest in S&S ISA’s so dont want to pile capital into lowering the borrow when i’m earning 6% in savings.

edit: typo - ‘borrow’
Edited by: "Jayden123" 28th Jun
Is this re mortgage too?
Jayden12328/06/2019 22:56

I’m 28 so mortgage would be paid by 63 on those terms, should be okay h …I’m 28 so mortgage would be paid by 63 on those terms, should be okay hopefully? I’d shorten the term later on in life I just happen to have a strong pension and great interest in S&S ISA’s so dont want to pile capital into lowering the borrow when i’m earning 6% in savings.edit: typo - ‘borrow’

6 percent guaranteed return?
For Santander members only...

Kindest regards
Don’t forget to factor in legal fees which Santander won’t pay. We were due to remortgage last year and didn’t because even with the lowest fee we could find, by the time we added on all the various fees it was working out more per month than if we stayed with our current lender on one of their deals.
fastenough28/06/2019 15:28

Do be careful with some of the mortgage calculators though as they only …Do be careful with some of the mortgage calculators though as they only show part of the picture - in this example the calculator shows the 'Cost over deal period including fees' and shows the 1.74% rate with zero fees as 'costing' ~£430 less for a £185K loan. However what it doesn't show is that proportionally more of the monthly payment is made up of interest. You can use this simple mortgage calculator and look at the interest portion to see how much of your monthly payment goes on interest and the amount on capital repayment. So while with the 1.74% deal you have paid out £430 less in total, in actual fact even taking into account the fees for the 1.35% deal on top of the interest payments you end up paying more in finance costs and have a bigger outstanding loan at the end of period.Rough example for a 185K loan over the 2 year period:1.35% - Monthly interest payment £200 x 24 = £4800 + £1250 fees (£999+ £250 exit) = £6050 purely in interest/fees to the bank. Capital repayment is monthly mortgage cost £730 - proportion of that which is interest £200 = £530 x 24 = £127201.74% - Monthly interest payment £260 x 24 = £6240 + £0 fees = £6240 purely in interest/fees to the bank. Capital repayment is monthly mortgage cost £760 - proportion of that which is interest £260 = £500 x 24 = £12000So yes the 1.74% means you have paid out £430 less over the period however in actual fact you would have spent more of the money that you have paid out in interest and less into capital repayment.However the general point you make here is it does depend on the loan size as to how much of a difference the interest rate makes versus the additional fees. With these 2 particular mortgage deals around £160,000 is the tipping point for where the additional interest payments become more than the lower interest rate.


Fantastic explanation
Wouldn't touch Santander with a barge pole after the way they overcharged me in fees over my mortgage. And their mortgage adviser tried every trick to get me to take out their ppi Awful bank!
Jayden12329/06/2019 12:19

no. stocks & shares ISA.


^^^what this fella does!

Why anyone would want to overpay their mortgage when rates are this low I don’t know! I haven’t bothered in years; It’s like free money!

Whack it all in a diversified S&S isa and then anything extra each year spread around the smaller savings accounts for 3-5%

If you’ve got children, and you don’t want to risk the stock markets, a Virgin Money red account allows 25k @ 2.25% (they have a young saver & young saver red which allows you to open two accounts at that rate for 50k savings at 2.25%)
What?? 1.35%?
chridt28/06/2019 15:25

Cold......Fake APR offset by the product fee,£999 over the 2 years adds …Cold......Fake APR offset by the product fee,£999 over the 2 years adds £41pm to the overall cost which would make a higher APR rate with no fee cheaper.....


Depends on your mortgage size too, a lower rate eroded capital more quickly as less of your monthly payment goes on interest.
r8sso29/06/2019 14:14

^^^what this fella does!Why anyone would want to overpay their mortgage …^^^what this fella does!Why anyone would want to overpay their mortgage when rates are this low I don’t know! I haven’t bothered in years; It’s like free money!Whack it all in a diversified S&S isa and then anything extra each year spread around the smaller savings accounts for 3-5%If you’ve got children, and you don’t want to risk the stock markets, a Virgin Money red account allows 25k @ 2.25% (they have a young saver & young saver red which allows you to open two accounts at that rate for 50k savings at 2.25%)


And what if if the interest rate trebles in the next few years?

I much prefer overpaying my mortgage to try and get it paid off as soon as possible. I will save 15k by overpaying at my current rate and I'm on a tracker at 1.24% above base rate.
p9dyl29/06/2019 15:24

And what if if the interest rate trebles in the next few years? I much …And what if if the interest rate trebles in the next few years? I much prefer overpaying my mortgage to try and get it paid off as soon as possible. I will save 15k by overpaying at my current rate and I'm on a tracker at 1.24% above base rate.


But like the other person said, just overpay at a later date!

If interest rates shoot up to a stupid amount liquify your S&S and over pay with all the money you’ve saved over the years you haven’t overpaid...

In the years you’ve been “saving money” (1.74%) by over paying i’ll have been earning more by putting all the overpayments in an S&S ISA ((circa 5-8%) caveat S&S can go up as well as down :-))

Over paying your mortgage suits you as it makes you feel comfortable knowing you have less debt and the mortgage calculators show you how much you can save by over paying. Everyone should do what they are comfortable with and to be honest S&S aren’t something you should blindly go into. Personally I’d rather have a 400k mortgage and 200k in S&S and 2.25% savings accounts.

Can you see my point though that if you put 100k in a savings account at 2.25% and you have a 100k overpayment on a mortgage at 1.74% you you will earn more in interest from the savings then you will accrue in interest from the mortgage?
Edited by: "r8sso" 29th Jun
r8sso29/06/2019 16:13

But like the other person said, just overpay at a later date! If interest …But like the other person said, just overpay at a later date! If interest rates shoot up to a stupid amount liquify your S&S and over pay with all the money you’ve saved over the years you haven’t overpaid... In the years you’ve been “saving money” (1.74%) by over paying i’ll have been earning more by putting all the overpayments in an S&S ISA ((circa 5-8%) caveat S&S can go up as well as down :-))Over paying your mortgage suits you as it makes you feel comfortable knowing you have less debt and the mortgage calculators show you how much you can save by over paying. Everyone should do what they are comfortable with and to be honest S&S aren’t something you should blindly go into. Personally I’d rather have a 400k mortgage and 200k in S&S and 2.25% savings accounts.Can you see my point though that if you put 100k in a savings account at 2.25% and you have a 100k overpayment on a mortgage at 1.74% you you will earn more in interest from the savings then you will accrue in interest from the mortgage?


Yes I agree completely. But show me where I can put 100k for a guaranteed 2.25% and I will gladly invest rather than overpay my mortgage.

The thing you need to calculate, has your money made on interest going to cover an interest rate rise on a massive amount of debt? Also your investment could easily go the other direction.

The advantage in my eyes is overpaying on a mortgage is that there is no variables. You know what you overpay and you know how much money that is going to save you over a set period of time.

Like you say everyone has a different view on which is best. For me I am saving a minimum of 15k by overpaying on my mortgage. The more interest rates rise the more I will save, but also paying more back in interest too. That's the part people dont get.

Once the mortgage is paid off I can then make investments with the piece of mind that I have no long term debt that will be affected by rate changes.
p9dyl29/06/2019 16:33

Yes I agree completely. But show me where I can put 100k for a guaranteed …Yes I agree completely. But show me where I can put 100k for a guaranteed 2.25% and I will gladly invest rather than overpay my mortgage. The thing you need to calculate, has your money made on interest going to cover an interest rate rise on a massive amount of debt? Also your investment could easily go the other direction.The advantage in my eyes is overpaying on a mortgage is that there is no variables. You know what you overpay and you know how much money that is going to save you over a set period of time.Like you say everyone has a different view on which is best. For me I am saving a minimum of 15k by overpaying on my mortgage. The more interest rates rise the more I will save, but also paying more back in interest too. That's the part people dont get. Once the mortgage is paid off I can then make investments with the piece of mind that I have no long term debt that will be affected by rate changes.




“The more interest rates rise the more I will save, but also paying more back in interest too. That's the part people dont get.“

But until mortgage interest rates rise above your savings account or investments you’re still better off saving/investing... you can also argue interest on savings accounts will increase slightly also when rates rise.

2.25% As i said earlier can be achieved on a Virgin Savings account if you have a child under 16. 50k per child.
Edited by: "r8sso" 29th Jun
r8sso29/06/2019 16:41

“The more interest rates rise the more I will save, but also paying more b …“The more interest rates rise the more I will save, but also paying more back in interest too. That's the part people dont get.“But until mortgage interest rates rise above your savings account or investments you’re still better off saving/investing... you can also argue interest on savings accounts will increase slightly also when rates rise.2.25% As i said earlier can be achieved on a Virgin Savings account if you have a child under 16. 50k per child.


Santander pay me 1.5% on £20,000 which is £300 per year.

If I put that £20,000 in my 100k mortgage as an overpayment it would save me £6,500 pounds in interest and take 3 years and 7 months off my 16 year mortgage term. Also I would be better prepared for an increase in interest rate as my overall debt which is charged daily is now down to £80,000 pounds.
Edited by: "p9dyl" 29th Jun
p9dyl29/06/2019 16:33

Yes I agree completely. But show me where I can put 100k for a guaranteed …Yes I agree completely. But show me where I can put 100k for a guaranteed 2.25% and I will gladly invest rather than overpay my mortgage. The thing you need to calculate, has your money made on interest going to cover an interest rate rise on a massive amount of debt? Also your investment could easily go the other direction.The advantage in my eyes is overpaying on a mortgage is that there is no variables. You know what you overpay and you know how much money that is going to save you over a set period of time.Like you say everyone has a different view on which is best. For me I am saving a minimum of 15k by overpaying on my mortgage. The more interest rates rise the more I will save, but also paying more back in interest too. That's the part people dont get. Once the mortgage is paid off I can then make investments with the piece of mind that I have no long term debt that will be affected by rate changes.


Quite!

On that level of interest, assuming you could even get it and if you can tell me where, you would also potentially be liable for payment of tax depending on your circumstances. You also have to bear in mind that there are no guarantees with investments and all the indicators are that we are coming to the end of a 30-year bull market, moving to a bear market with lower returns. 2018 was a bad year for investing, for example.

The other aspect is the human psyche relating to investing and whether you would be happy to watch your life savings ebb away due to poor market performance. Do you sleep well at night and sit tight which is what logic dictates, or do you do the worst thing possible and panic cell. You are then potentially in a much worse situation than you would have been, had you just reduced the debt on your mortgage. Of course though, everybody is different and I am not saying that my preferred approach is better than yours. It is just not one I would recommend for most people.
r8sso29/06/2019 14:14

^^^what this fella does!Why anyone would want to overpay their mortgage …^^^what this fella does!Why anyone would want to overpay their mortgage when rates are this low I don’t know! I haven’t bothered in years; It’s like free money!Whack it all in a diversified S&S isa and then anything extra each year spread around the smaller savings accounts for 3-5%If you’ve got children, and you don’t want to risk the stock markets, a Virgin Money red account allows 25k @ 2.25% (they have a young saver & young saver red which allows you to open two accounts at that rate for 50k savings at 2.25%)



i get what you mean but depends on how strict someone is with their money/savings.

If you are strict at saving and budgeting and you wont be unnecessarily dipping into your savings then go for saving/investing, etc..........but if you tend to dip into savings then overpaying mortgage is probably a more sensible approach.

I will use an example of 2 colleagues from old work. One who overpays his mortgage and the other who doesn't as rates are so low.
They both bought their houses in 2007 before credit crunch with 100% mortgages.
One has been chipping away at it with regular monthly overpayments and paying bonus, sharesave etc into it, he will be mortgage free this xmas.
The other puts his sharesave, bonus, savings, etc into isas and santander current account with the intention that he will at a later stage overpay.......but he dips in and buys nice cars, nice hols (he is good to himself).....and has paid nothing extra into mortgage.
r8sso29/06/2019 14:14

^^^what this fella does!Why anyone would want to overpay their mortgage …^^^what this fella does!Why anyone would want to overpay their mortgage when rates are this low I don’t know! I haven’t bothered in years; It’s like free money!Whack it all in a diversified S&S isa and then anything extra each year spread around the smaller savings accounts for 3-5%If you’ve got children, and you don’t want to risk the stock markets, a Virgin Money red account allows 25k @ 2.25% (they have a young saver & young saver red which allows you to open two accounts at that rate for 50k savings at 2.25%)


This is folly, And what happens when the stock market tanks (as is expected in the near future?).
Why not aim to get debt free, then use your extra cash to invest?
Thanks for posting @fastenough we have added this to today's Highlights section
ran123ran29/06/2019 17:52

i get what you mean but depends on how strict someone is with their …i get what you mean but depends on how strict someone is with their money/savings.If you are strict at saving and budgeting and you wont be unnecessarily dipping into your savings then go for saving/investing, etc..........but if you tend to dip into savings then overpaying mortgage is probably a more sensible approach.I will use an example of 2 colleagues from old work. One who overpays his mortgage and the other who doesn't as rates are so low.They both bought their houses in 2007 before credit crunch with 100% mortgages.One has been chipping away at it with regular monthly overpayments and paying bonus, sharesave etc into it, he will be mortgage free this xmas.The other puts his sharesave, bonus, savings, etc into isas and santander current account with the intention that he will at a later stage overpay.......but he dips in and buys nice cars, nice hols (he is good to himself).....and has paid nothing extra into mortgage.


But this is not a comparison of the 2 overpayment strategies. It's the story of a self-disciplined vs a non self-disciplined guy.
£999 to sign a contract, thieving bast...s !!
chridt28/06/2019 15:25

Cold......Fake APR offset by the product fee,£999 over the 2 years adds …Cold......Fake APR offset by the product fee,£999 over the 2 years adds £41pm to the overall cost which would make a higher APR rate with no fee cheaper.....


The APR means nothing in mortgages terms. As it includes your mortgage being on their variable rate for the remainder of the mortgage.

The fee is also included in APR given
Santander usually have an early repayment charge on fixed rates too (we have one).

It frustrates me that the early charge percentage isn't stepped like some providers. It's the same % day one, to the day before the period runs out.
diariesofsimba30/06/2019 13:42

The APR means nothing in mortgages terms. As it includes your mortgage …The APR means nothing in mortgages terms. As it includes your mortgage being on their variable rate for the remainder of the mortgage. The fee is also included in APR given


I don’t have a clue what you just said,you probably don’t either.....
chridt28/06/2019 15:25

Cold......Fake APR offset by the product fee,£999 over the 2 years adds …Cold......Fake APR offset by the product fee,£999 over the 2 years adds £41pm to the overall cost which would make a higher APR rate with no fee cheaper.....


Totally correct set up.free high for just 2 years
chridt28/06/2019 15:25

Cold......Fake APR offset by the product fee,£999 over the 2 years adds …Cold......Fake APR offset by the product fee,£999 over the 2 years adds £41pm to the overall cost which would make a higher APR rate with no fee cheaper.....


Is anyone aware of a better deal available just now? Per the worked example I commented on the best zero fees deal I could find is more expensive but if anyone knows of a better rate and is willing to share this would help me and our fellow hukd'rs
Looking for remortgage £145000
any suggestions?
On property worth £400000
Thanks
Not available to existing Santander customers
chridt30/06/2019 14:47

I don’t have a clue what you just said,you probably don’t either.....



Do a bit of research then. As what I wrote is clear,
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