Comparing a 6.58% five-year fix on a £651,300 London purchase

[readTheEcho]

Putting the numbers down before the headline rate takes over. I have a 6.58% quote fixed for five years on a London property purchase around £651,300. The advertised rate was lower, but the arrangement fees and the applicable loan-to-value tier changed the picture.

What are people using to compare offers: APR, interest charged during the five-year fix, or total cash paid including fees? I also want to avoid assuming that I will simply refinance cheaply after five years. Portability and early-repayment terms are still on my list.

 

[DirectCairn]

I would compare total cost over the five years, plus the mortgage balance left at the end. Monthly payments alone can make two offers look closer than they are, while APR may assume you keep the mortgage beyond the fixed period. Put any arrangement fee into the calculation, including interest on it if it is added to the loan.

 

[PatientCedar]

What loan amount sits behind the £651,300 purchase price? Without the deposit and resulting LTV, nobody can tell whether the quote is genuinely poor or simply priced for that tier. Also, are you paying the fee upfront or adding it to the mortgage?

 

[readsAndBirch]

Five years is the obvious comparison period only if you are fairly confident you will stay that long. I would also run exit points after years two and three, using the actual early-repayment terms. A slightly cheaper five-year total can lose its advantage if your plans change and the exit charge is substantial.

 

[DirectCairn]

Agreed with Anders, though the remaining balance still matters in those shorter scenarios. For each possible exit date, list payments made, fees paid, any early-repayment charge and the balance still owed. That gives a cleaner comparison than adding up payments and calling the lowest one cheapest.

 

[readsAndBirch]

I would not let the spreadsheet bury the affordability issue. At 6.58%, does the monthly payment leave enough room for repairs, moving costs and an income interruption? Then test a higher payment after the five-year fix. A future refinance is a possibility, not something I would rely on to make today's payment workable.

 

[lina.snow]

Portability deserves separate questions. I would not treat the word itself as a promise that the same borrowing can move automatically to another property. Ask what happens if the next purchase needs more borrowing, less borrowing or falls into another LTV tier, and get the product-specific conditions explained before assigning portability much value.

 

[alba.wood]

There is also a simple fee-versus-rate trap. A lower rate with a larger arrangement fee tends to need time, and enough borrowing, to recover that fee. Compare the two offers month by month rather than assuming the lower percentage wins. If the fee is added to the loan, include the extra interest and resulting balance.

 

[amber_chalk]

The refinance assumption is the weak point for me. Run at least three end-of-fix cases: a lower available rate, a similar one and a higher one. Keep the future property value conservative because that affects the later LTV. You do not need to predict the market; you need to see whether the purchase still works when the favourable case fails.

 

[miro_ash]

One practical question for the lender: when does the arrangement fee become non-refundable, if at all? That detail varies by offer and can matter if the purchase collapses or the mortgage changes before completion. I would also separate valuation or application-related costs from the arrangement fee so each quote is compared on the same basis.

 

[miro_ash]

To clarify my last point, I would not mix unavoidable purchase costs into the mortgage comparison. Include only costs that differ between the competing mortgage offers, while keeping all shared costs identical in each scenario.

 

[miro_ash]

And request the early-repayment schedule in pounds as well as percentages, calculated against your expected balance. Percentages are easy to underestimate on a large loan. If overpayments might be part of your plan, ask how those interact with the early-repayment terms rather than assuming every reduction is treated alike.

 

[amber_chalk]

APR can still be useful as a warning sign when the advertised rate and fees are pulling in opposite directions, but I would not use it as the final answer here. Your intended five-year holding period, possible early exit and likely remortgage behaviour are more specific than the assumptions built into a single long-term figure.

 

[wise_book]

My next step would be a one-page table for each offer: initial loan, LTV tier, fixed rate, fee treatment, monthly payment, five-year cash paid, balance after five years, early-exit costs and payment under several reset rates. Then add a notes column for portability conditions. Any lender or broker should be asked to resolve gaps using the actual illustration rather than an advertised example.

 

[watchTheSlate]

The 6.58% figure by itself cannot answer whether this is competitive. The useful decision is whether another available offer produces a better outcome under your likely timeline without making monthly affordability too tight. First confirm the loan amount and fee treatment, then compare five-year cost and remaining balance; after that, test an earlier move and an unfavourable rate reset.