"You should not take out a fixed rate mortgage "

There wasn't much room for error. But I see I managed to make one!

I was subtracting 5k from EBS cumulative interest. I should have been subtracting 3.5k , following the info from my scenario above where UB give 1.5k in legal fees.
 
Sorry, it looked so complicated that I assumed you were counting sheep's legs.

Is the following, much simpler, calculation, materially incorrect? I don't think so, but you can check it easily. If my figure is right, yours is wrong. If my figure is wrong, then yours might be right.

Brendan Burgess said:
€250k @0.4% = €1,000 a year. So it would take 3.5 years.

So go for the cash back as it's possible you will have switched within 3.5 years.
Click to expand...

Brendan
 
Yes, your figure of 3.5 years is correct. I get the same answer when I updated my spreadsheet to subtract 3.5k from cumulative interest of EBS.

I understand what you are saying about over complicating it. But the way I've calculated makes sense to me, as I understand it. I don't understand your calculation - I'm sure it's right, I just don't understand it.

0.4% of €250k is €1000. I get this bit :)

What I don't get is how you can say it is €1000 every year. The principle of €250k is decreasing all the time. What am I missing here?
 
metricspaces said:
Yes, your figure of 3.5 years is correct. I get the same answer when I updated my spreadsheet to subtract 3.5k from cumulative interest of EBS.
Click to expand...

Whew!

metricspaces said:
The principle of €250k is decreasing all the time. What am I missing here?
Click to expand...

For questions like this a very rough answer is good enough for decision making purposes. You don't need an exact answer as you are, in effect, making a forecast.

The principal does reduce, but very slowly in the first few years, so it makes no difference to the outcome.

There is a principle in engineering which really should be adapted to finance - "You can't add a more precise number to a less precise number".

You are making an implied forecast about interest rates. So there is no need for precision.

Brendan
 
Perfect, thanks Brendan. That makes sense now - your calculation was an approximation, but margin of error is so small it's irrelevant for the analysis here.
 
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