Fee vs Rate Comparison Calculator
Compare a low rate with a large arrangement fee against a higher rate with no fee across the fixed period, to find which deal really costs less.
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Lenders advertise the rate and bury the fee, and on smaller loans the fee frequently outweighs the rate saving entirely. The comparison that matters is total cost across the fixed period — every payment plus the fee — not the headline rate.
The break-even loan size matters too. A large fee is easily justified on a big mortgage where a small rate difference is worth thousands a year, and almost never on a small one.
The comparison
Work out each deal monthly payment over the full mortgage term, multiply by the number of months in the deal period, and add that deal fee. Comparing over the deal period rather than the full term is what matters, because you will remortgage when the deal ends.
Worked example
On a 250,000 mortgage over 25 years with a 2-year fix: Deal A at 5% with a 1,999 fee costs 1,461 a month, so 35,075 plus the fee — 37,074 in total. Deal B at 5.5% with no fee costs 1,535 a month, or 36,845. Deal B is about 229 cheaper, despite the higher rate.
Loan size decides it
Run the same two deals on a 500,000 mortgage and Deal A wins comfortably, because the half-point saving doubles while the fee stays the same. Large fees suit large loans; on small ones the fee-free option usually wins.
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Create your free property pageFrequently asked questions
Should I add the fee to the loan?
It preserves cash but you pay interest on the fee for the whole remaining term, often turning a 2,000 fee into considerably more. Paying it up front is cheaper whenever you can, and this comparison assumes you do.
Why compare over the deal period rather than the full term?
Because almost nobody stays on the same product for twenty-five years. When the deal ends you remortgage, so the only period the fee and rate genuinely apply to is the fixed term.
What else should I compare besides fee and rate?
Early repayment charges, whether overpayments are allowed and how much, whether the product is portable to a new property, and any cashback. Those can be worth more than the rate difference between two close deals.
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