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  • FIRST POST
    • muhandis
    • By muhandis 13th Sep 17, 10:02 AM
    • 336Posts
    • 136Thanks
    muhandis
    Nationwide product switch query
    • #1
    • 13th Sep 17, 10:02 AM
    Nationwide product switch query 13th Sep 17 at 10:02 AM
    Hi,

    I booked a non-advised product switch a few days ago to start on Oct 1 and received confirmation. The rate was 1.24% for a 2 year fix for a loan amount of £265k.

    I now see that the rate for this product has gone down to 1.19%. When I called NW to cancel the switch and change to the new product, they said that they can cancel it now but I can only book a new product switch after I've made the payment for one month (the next payment due on Oct 1) at the SMR of 3.74%.

    That being the case, I'm struggling to work out if it is still worthwhile to do this or just leave it at 1.24%?

    Please could someone help me with how to go about calculating which one leaves me better off -

    1. Leaving it at 1.24%
    2. Cancelling the product switch, paying 3.74% for one month and then 1.19%.

    Thanks,

    Kala
Page 1
    • Brighty
    • By Brighty 13th Sep 17, 10:10 AM
    • 729 Posts
    • 378 Thanks
    Brighty
    • #2
    • 13th Sep 17, 10:10 AM
    • #2
    • 13th Sep 17, 10:10 AM
    How long on the mortgage?
    Any product fees with either deal?
    • muhandis
    • By muhandis 13th Sep 17, 10:24 AM
    • 336 Posts
    • 136 Thanks
    muhandis
    • #3
    • 13th Sep 17, 10:24 AM
    • #3
    • 13th Sep 17, 10:24 AM
    31 years, both have a £899 product fee.


    How long on the mortgage?
    Any product fees with either deal?
    Originally posted by Brighty
    • Brighty
    • By Brighty 13th Sep 17, 10:33 AM
    • 729 Posts
    • 378 Thanks
    Brighty
    • #4
    • 13th Sep 17, 10:33 AM
    • #4
    • 13th Sep 17, 10:33 AM
    So would you need to pay the product fee twice if you cancel the 1.24%?

    If not and assuming you're adding the fee to the mortage, just plug the numbers into a mortgage calculator for each of the three rates.
    I got

    1.24% monthly payment roughly £861, balance after 2 years roughly £251654

    1.19%monthly payment roughly £855, balance after 2 years roughly £251543

    So going for the 1.19% would save you roughly £144 in monthly payments and leave you with a balance £111 lower, so you'd be better off by £255. However, that one off 3.74% payment would be £1208, £347 higher than if you stayed with 1.24%, plus it would probably push your end of 2 year balance up a smidge too. Stay as you are
    Last edited by Brighty; 13-09-2017 at 10:48 AM.
    • muhandis
    • By muhandis 13th Sep 17, 12:27 PM
    • 336 Posts
    • 136 Thanks
    muhandis
    • #5
    • 13th Sep 17, 12:27 PM
    • #5
    • 13th Sep 17, 12:27 PM
    Brilliant, thank you so much!


    So would you need to pay the product fee twice if you cancel the 1.24%?

    If not and assuming you're adding the fee to the mortage, just plug the numbers into a mortgage calculator for each of the three rates.
    I got

    1.24% monthly payment roughly £861, balance after 2 years roughly £251654

    1.19%monthly payment roughly £855, balance after 2 years roughly £251543

    So going for the 1.19% would save you roughly £144 in monthly payments and leave you with a balance £111 lower, so you'd be better off by £255. However, that one off 3.74% payment would be £1208, £347 higher than if you stayed with 1.24%, plus it would probably push your end of 2 year balance up a smidge too. Stay as you are
    Originally posted by Brighty
    • getmore4less
    • By getmore4less 13th Sep 17, 2:50 PM
    • 30,248 Posts
    • 18,088 Thanks
    getmore4less
    • #6
    • 13th Sep 17, 2:50 PM
    • #6
    • 13th Sep 17, 2:50 PM
    The max you can save is based on interest only

    £265000 (0.0124-0.0119)*2 = £265

    that won't cover the extra fee(£899) or the month on the higher rate(£560 extra interest)

    switch paying the fee and the extra month will have you over £1k behind.

    more accurate using the same payment on both say £860 and what's left in 2 years

    £265000 @ 1.24% £860pm £250,764
    1month
    £265000 @ 3.74% £860pm £264,966
    add the fee 23months
    £265,865 @ 1.19% £860pm £251,998

    the real payment won't make much difference
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