How can I find out how much a mortgage will cost?

Q I was amazed to discover that in a mortgage Key Facts Illustration, the lenders are not required to give information about the repayment part of the instalments in a repayment mortgage.

How am I supposed to calculate the true total cost of a product if I don't know the outstanding capital after, say, three years? They only tell you what you will pay at the end of the term, but being realistic, there's no way I will keep the same mortgage/property for 25 years.

Is there a way of calculating what proportions are for repayment and interest? The lenders themselves just say they cannot provide this information. Are they trying to deceive me?

SB

A No they are not trying to deceive, they're just doing what is expected of them by the Financial Services Authority (FSA) which started regulating mortgages at the end of October 2004.

And the whole point of Key Facts Illustration is that they do in fact give the true cost of the mortgage presented in a standardised way so that it is possible to compare one mortgage with another (assuming you ask for Key Facts Illustrations for loans of the same amount and term).

As well as showing the interest rate and monthly repayment, lenders must also show the total amount payable over the life of the mortgage - including all fees - together with a handy comparative tool in the form of a figure showing the cost for every pound borrowed. So you can see at a glance that a mortgage costing ?2.03 a pound borrowed is cheaper than a mortgage costing ?2.05 a pound even though the two mortgages may have the same interest rate.

But I can see that you might find it a little unrealistic that the information you get in a Key Facts Illustration assumes that you keep the same mortgage for its full term. And I can also see that it would be helpful to have information about how much capital has been paid off in the early years as an indication of which mortgage would suit you best if, as I suspect, you plan to switch your mortgage every few years to get the best deal (as, in fact, the FSA encourages consumers to do).

However, if you do plan to do this, you can compare mortgages on the basis of their interest rates as it is a pretty safe bet that the lower the interest rate, the faster you pay off capital. So, for example, after three years of a 25-year mortgage of ?70,000 with an interest rate of 6%, the outstanding balance would be around ?66,000 whereas it would be more like ?66,550 with an interest rate of 7%.

And I'm appalled that lenders are telling you that they cannot give you repayment information. Although they may not provide it as a matter of course, they should be able to provide it if you ask. To say that it's not possible is a nonsense since they have to provide this information in their customers' yearly mortgage statements.