Which mortgage sounds better?

Mortgage 1

Loan: 208300EUR (70% purchase price)
Int Rate: 5.5% for the first year and (annual) Euribor+0.75% for the rest of years
35 years repayment mortgage
Early repayment charge: 1-5 yrs 0.5% / 5 yrs onwards 0.25%
Opening fees: 0.75%
Life insurance (365EUR) & Building insurance (309EUR) required from the bank.

Mortgage 2

Loan:191750EUR (65% purchase price)
Int Rate: Quarterly Euribor+1%
35 years interest only mortgage (or repayment we've got a choice)
Early repayment charge: none, admin fees 200EUR at any time
Opening Fees: 1%
Life insurance not required
Building insurance required

What do you think? Thanks!

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Mortgage 2

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I find interest only mortgages a bit scary so I would go with mortgage 1.

Justin

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Justin - You can choose either interest only or repayment. We don't mind going for repayment type..

This message was last edited by puret0ne on 8/12/2008.

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PuretOne,

It would be very difficult to advise which of the 2 is better for you, not knowing what is the more important i.e. interest rate (3 month Euribor + 1 currently 5.87% and 1 year Euribor + 0.75 currently 6.11%) vs amount. Generally, looking at the conditions I would say the quote for life assurance is extremely high - is this a developer mortgage?

Option 2; I know which lender product this is and they also charge a 0.5% conveyance fee, whether you use thier lawyer or not.

   

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Hi Sharon,

It's not a developer's but we were introduced by the developer to this bank. We had a massive problem with the developer's bank..

Yes I think the life insurance is a bit of ouch. That covers both death and 'incapacidad permanente absoluta' and the premium will decrease in accordance with the reduction in the capital of the mortgage...

I would say the interest would be more important but paying 5% more than I planned did affect me too.

I am not sure about your option 2 comment. They didn't mention a 0.5% conveyance fee at all...Currently I paid a valuation fee to this lender.

I will have to make a decision by tomorrow...We're already 1 month behind from expected signing date and very close to being charged by the developer for the interest accured on our house...

Mortgage 1 is  a Spanish lender and Mortgage 2 an English one..

Any last minute advice will be tremendously appreciated.

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Hi puretOne,

Again it is difficult to call it!   Not sure who the lender is for option 1, but ultimately they are both variable rate mortgages over the same term!  The 3 month Euribor generally trades lower than the annual  and is due to be set for the next period on the 1st September and as an indicator, today it stands at 4.97% so giving a mortgage rate of 5.97%. 

Are these 2 options Decisions in Principal or actual offers?   The 1st year fixed rate at 5.5% seems low, how long have you had these DIP / offers?    You say you have paid a valuation fee to the UK lender;  has the valaution been done? If not then the result of this could dictate your decision.

Are you arranging the mortgage via a broker or direct with the lender/s?  I would check the UK lender conveyance chrage as it is definately applicable and on a mortgage amount of  €191,750 this is 958.75 euros payble!   

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Hi Sharon,

Both banks considered our applications and gave these conditions. The UK one conducted the valuation so I will hear the result tomorrow. We've had DIP/offers (not entirely sure what they are to be honest)  for a couple of weeks..

Yep the UK one charges a conveyance fee which I am aware of.

I am leaning towards Option 1..

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Hi puretOne,

Ah ok so sounds like you have had Decisions in Principal (subject to supporting documentation) and mortgage offers (subject to valuation).  Good luck with the valuation result today.  Not too sure who the Spanish lender is with option 1 but if you do decide to go with them they MAY accept the valuation you have already had done, as long as the valuation company are on their panel. This could save you another valuation fee!!!

  

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