Comparing an 8.23% 10-year fix on a £939,900 London purchase

R

readTheEcho

Mortgage adviser
Established
Verified Pro
The monthly payment has to remain manageable without using all my available cash for the deposit. Against that constraint, I have a quote at 8.23% fixed for 10 years for a London purchase of about £939,900. The pricing shifted once the lender applied my LTV band and included the product fee.

How would you compare this with shorter fixes or fee-free options: interest and fees to a chosen date, the remaining balance, or total monthly outgoings? I also want to understand what happens if I move, overpay or need to leave the deal before year ten.
 
I would compare over the 10-year fixed period, not rely on APR alone. Put each deal into a spreadsheet with the same loan amount and term: monthly payments, all mortgage fees, interest charged, and the balance remaining after year ten. Cash paid is useful for affordability, but interest plus fees gives a clearer view of cost because part of each payment reduces the balance.
 
What loan amount and LTV band are you actually in? The £939,900 purchase price doesn’t tell us how much is being borrowed, and that will determine whether a large fee matters much. Also, can the fee be paid upfront, or is it being added to the mortgage? If added, it attracts interest too.
 
Good distinction. I was treating every monthly payment as a cost rather than separating principal from interest. I’ll compare the balance left after ten years as well.

The exact loan amount is still being finalised because I may increase the deposit to reach a different LTV tier. That’s also why I’m reluctant to judge the advertised rate without the full illustration.
 
Before increasing the deposit, compare the saving from the better LTV tier with what that extra cash is worth to you as a reserve. Reaching a lower rate can help, but not if completion leaves you with no room for repairs, moving costs or a payment shock. On a 10-year fix, monthly affordability matters as much as the headline comparison.
 
One more point: run the same comparison with an assumed move partway through the fix. “Portable” does not necessarily mean the existing loan can be transferred automatically or that any extra borrowing gets identical terms. Ask what happens if the next property is cheaper, more expensive, or fails the lender’s criteria, and whether early-repayment charges could then apply.
 
Ten years is a useful baseline, but leaving early is the specific risk I would add. The portability checks above cover one version of that, while a second comparison should show the cost if portability is refused or no longer suits the next purchase.

I would run three dates: the likely moving date, a date after permitted overpayments, and the full ten years. For example, a small fee saving now may be irrelevant if an early-repayment charge becomes payable in year five. That keeps the long fix in the comparison without assuming your plans stay unchanged.
 
APR answers a different question because it reflects assumptions across the wider mortgage term, including what happens after the fixed period. If you realistically expect to reconsider the mortgage after ten years, compare fixed-period interest and fees first, then separately test the reset risk. Nobody knows the future rate, so use several payment scenarios rather than one optimistic refinancing assumption.
 
Also ask for fee-free alternatives from the same lender. A higher rate with no arrangement fee can beat a lower-rate, high-fee deal depending on the mortgage size and how long it is kept. For each option I’d record: upfront cash required, monthly payment, total interest and fees to the chosen date, remaining balance, and the cost of leaving on that date.
 
At 8.23%, I wouldn’t focus only on choosing the right comparison measure. I’d also ask why this specific quote differs from the advertised offer: LTV tier, affordability assessment, property details, loan structure, or something else. Without the quote date and full circumstances, nobody here can say whether it is competitive, but the reason for the gap should be made explicit.
 
Choosing the cheapest-looking quote feels risky when the reason for the 8.23% is unclear, but choosing ten years of certainty without testing an earlier exit is not comfortable either. Ask each lender or broker for written figures based on the same deposit, term, repayment method and treatment of fees.

Then compare the position at years two, five and ten: cash required upfront, monthly payment, interest and fees paid, balance outstanding and exit cost. Once the lender explains the pricing gap, those figures should show whether the longer fix is buying useful certainty or merely making a change of plans expensive.
 
You must log in or register to reply here.
Back
Top