Comparing a 7.80% one-year fixed mortgage on a £514,800 London purchase

[readTheEcho]

Comparing the headline rate seems simple, while comparing the cost over the one-year fix may lead to a different choice. I have a 7.80% quote on a London purchase of about £514,800. A seemingly cheaper offer moved into another loan-to-value tier and carried an arrangement fee, so its advantage was much smaller than expected.

For this decision I’m weighing payments and fees over the fixed year against the flexibility of portability and early-repayment terms. APR may assume the mortgage is retained far longer than planned, but a one-year calculation also depends on being able to refinance afterwards. Would you model the cash cost for the first year and then test a less favourable refinance scenario separately? I also need to compare whether each fee is paid upfront or added to the loan.

 

[DirectCairn]

For a one-year fix, I would compare the total cost over that year: monthly payments plus arrangement and other lender fees, less the capital repaid. APR can be misleading for your decision because it stretches assumptions beyond the period you expect to keep the product. Keep affordability separate too—the cheapest total cost is no help if the monthly payment is uncomfortable.

 

[wise_book]

What loan amount and LTV tier does the 7.80% quote assume, and is the arrangement fee paid upfront or added to the mortgage? Without those details, the advertised rate comparison is incomplete. Adding the fee to the borrowing can also affect both payments and interest, even if the difference looks modest over one year.

 

[wise_book]

I’d also ask what happens immediately after the fixed year. A cheap-looking 12-month comparison may quietly assume you can refinance promptly and qualify for another competitive deal. If your LTV, income position or the wider market changes, the rate-reset risk could matter more than a small saving now.

 

[makeTheCanvas]

I don’t think APR should be dismissed entirely. It is a useful consistency check, especially where one offer has a low headline rate and a large fee. I just wouldn’t use it alone here. Run at least two time horizons: the fixed year, then a longer case where refinancing is delayed. That exposes how dependent each option is on a smooth remortgage.

 

[checkTheBlueprint]

Put the offers into a simple table with: starting loan, LTV band, upfront fee, any fee added to the loan, 12 monthly payments, balance after one year, early-repayment cost, portability conditions and the rate after the fix. Then test an early sale or delayed refinance. Portability is worth reading carefully—it may provide flexibility, but it should not automatically be treated as guaranteed access to the same borrowing on a different property.