Nationwide fixed end in Feb 09...one account??

paulsrich

Well first off all let me apologise if i start rambling on but I am getting more and more confused everytime i read a different forum on mortgages and the one account.

I will explain my situations at the moment...

I got a 25 year mortgage with Nationwide fixed for 5 years at 5.39%. The 5 year period finishes in Feb next year. My repayment at the moment are £535 a month which i manage with no problems.

I am very aware that my payments will increase after my fixed period has come to an end so started over paying since May this year by £250 too £300 every month depending how flush i am feeling.

I have just over £9000 in an isa so have used this years entitlement. Also have £4000 in saving account for a rainy day but tend to forget about it.
I like to have a balance off £2000 in my current account for every day things but to be honest dont spend no way near that amount. I dont have any debt or loans and the house was valued at £200,000 but that was over 2 months ago.

Just not sure what to do. Do i stick with Nationwide for another fixed rate mortgate or look at a product like The one account. The calculator says mortgage free is just over 2 years but i am very sceptical!!! Especially after reading these posts.... also might do it for 3 years or so and see.

I think thats all the details I need to put down. Just want to hear other people opinions................ Thanks in advance.

Locoblade

There's several other pro/con threads relating to the One Account on here, so worth hunting those out for more detailed opinions on its merits and pitfalls.

Basically it boils down to being quite expensive for what it is, but the way it works suits some people's lifestyles so they see benefit from it despite of this. The calculator on their website is also very much a "best case scenario" so is rather optimistic in 99% of cases.

The One Account isn't unique though, there are other offset accounts out there that offer better rates with similar functionality/flexibility. Have a look at First Direct for starters, their offsets are more competitive and (IMHO) they structure the account better so you have seperate pots for mortgage, savings and current account, rather than the "all in one pot showing a huge overdraft" style of the One Account, which I'd personally find daunting I think, and harder to ensure I was paying/overpaying the amount I wanted.

paulsrich

Thanks. You are correct i would hate having to see over drawn all the time and putting all my eggs in one basket. I like having a mortgage account, current and savings one. I will have a look at the other ones you have recommended. Thankyou once again.

Locoblade

Just to clarify, with the First Direct way of structuring your accounts, they all offset against the mortgage so you get just as much benefit as you would with a One Account, its just the money is seperated into more "conventional" looking pots as you'd have with a normal repayment mortgage with seperate savings/current accounts. Its all psychological really I guess, but I think with a seperate current account, those of us coming from conventional mortgages would notice additional outgoings a lot more easily looking at a current account that goes from x to zero each month rather than noticing if an overdraft of £100k+ has dropped or risen by a couple of hundred quid each month.

The only slight downside with FD is you can't offset your ISAs against the loan value like you can with some other offset accounts (Woolwich you can I think), so you either keep the ISA seperate and not offsetting, or transfer it into your offset savings and lose your ISA tax free entitlements for that year.

I'm currently a bit further down the line than you on a similar path, moving from Nationwide to First Direct's offset lifetime tracker at the end of October.

paulsrich

I have had a few responses on this. Does anyone else got any advice or views?

dimbo61

Nationwide are doing some good fixed rate deals and you wont have to pay the fees that come with moving mortgage.
You are also allowed to overpay by £500 a month.
If you need and like the security of having a fix but also want rid of the debt asap then overpaying and saving into an ISA ( cash) would also be a good way to acheive that aim.
£500 x 12 = £6000 plus £3600 in ISA plus mortgage payments and living!
You might have the mortgage paid in 5 years.

foreversummer

paulsrich wrote: »

I am very aware that my payments will increase after my fixed period has come to an end

Why are you so sure that your payments will increase next year? Mortgage rates are beginning to come down and all indications are that base rates will start to fall soon - you might be able to get a similar or even better rate in February.

Just grab the best interest rate you can and continue to overpay would be my thought.

Foreversummer

getmore4less

Original loan was for around £88k at the 5 year stage you will be at around £78400 + the effect of all the overpayments which will be about 10 payments so £2500-£3000 and some interest, lets say around £75k to remortgage.

That will be at say 6% so new repayment will be over 20y £537, the same as you are paying now so the overpayments have done the job.

With the £250pm over payments say £800 total that will bring the term down to <11years to get under 10 you need £840pm so if you can find the £300 ever month you will be there.

If you have a good budget and most things planned for then the only crisis would be job loss, and you have enough funds to cover a fairly large gap in income.

I would keep filling those ISA's, good long term tax free money, once the mortgage is paid off you will have more than the allowance so using them now is a good idea.

The emergency funds are well stocked so you could offset and get some stooze money to help but it will be some work, could make a big difference if you could get £20k cheap on the credit cards.


The one account calculator, it seems a lot of people have trouble using it and get these silly numbers,

There is no way you can pay this off in two years, payment needed would be over £3000pm.

paulsrich

Wow. Thankyou for all your help. I just hope the rate drops to 5.39% again so my payments will be the same.
I will stick with nationwide and sort a rate out over the next few months. As i am sticking with Nationwide do i still need to book a rate a few months before hand??