Choosing on the headline rate could leave me paying more for a decade and facing an awkward reset afterward. The property is a Manila studio at roughly PHP 24,360,000, and one option is fixed at 5.61% for 10 years.
The lenders have used different loan-to-value bands, fees and illustration assumptions. My current comparison puts both on the same loan amount and repayment schedule, then records cash paid during the fixed term plus the balance still owed after year 10. APR is useful, but it does not answer that question cleanly when the assumptions differ.
My decision rule is becoming fairly simple. If I expect to keep the loan for the full fixed period, I will compare the ten-year cash cost, ending balance and reset terms. If selling or refinancing earlier is realistic, early-repayment charges and portability carry more weight.
Is there another line item I should normalise? Arrangement fees, treatment of overpayments and the post-fix rate are already on the sheet, as I do not want affordability to rely on a favourable refinancing scenario.
The lenders have used different loan-to-value bands, fees and illustration assumptions. My current comparison puts both on the same loan amount and repayment schedule, then records cash paid during the fixed term plus the balance still owed after year 10. APR is useful, but it does not answer that question cleanly when the assumptions differ.
My decision rule is becoming fairly simple. If I expect to keep the loan for the full fixed period, I will compare the ten-year cash cost, ending balance and reset terms. If selling or refinancing earlier is realistic, early-repayment charges and portability carry more weight.
Is there another line item I should normalise? Arrangement fees, treatment of overpayments and the post-fix rate are already on the sheet, as I do not want affordability to rely on a favourable refinancing scenario.