Advice needed on getting out of a new fixed-rate deal

Hopper1975

Hi,
About 2 months ago I approached Natwest about negotiating a new rate, as my initial fixed-rate deal comes to end in December. After some negotiating I managed to get offered a 5.45% deal, fixed for 5 years but with a £3499 product fee. This was before the 0.5% and 1.5% base rate cuts, when the SVR was at 7.19%, so this looked like a very attractive deal despite the high arrangement fee, bearing in mind this was before there was before any of serious base-rate cuts. Just before accepting the deal, the base rate was cut by 0.5% so I asked Natwest whether they could improve the deal but they couldn't do so, I therefore verbally accepted the rate.

Since then the SVR has come down to 4.69% - well below the 5.45% I would be paying. I am therefore in the position where I am paying £3499 to pay a higher rate!

The rate is noy yet active and doesn't come into effect until Dec 1st. Ideally I would like to either cancel the deal and stay on the SVR, or to walk away from Natwest entirely. I have been in contact with Natwest, but they say the fee is non-negotiable as I have verbally accepted. Any advice would be most appreciated.

Baz_2

Oh dear, you will lose your fee Im afraid.

Best you could hope for would be if they come out with a better fixed rate that you could change to.

What on earth possessed you to think a £3499 fee was a good idea?

atlantis187

I got offered exact same deal as you from RBS 2 months back. I refused it straight away (they mst have thought i was some sort of fool paying that sort of arr fee).
Went instead with First Direct offset 0.79 tracker and have gained straight away. Unfortunately this deal is no longer available.

Hopper1975

atlantis187 wrote: »

I got offered exact same deal as you from RBS 2 months back. I refused it straight away (they mst have thought i was some sort of fool paying that sort of arr fee).
Went instead with First Direct offset 0.79 tracker and have gained straight away. Unfortunately this deal is no longer available.

Yeah it's certainly very high, but the rate was far below anything else I was offered, so I would have made up the difference in about a year. Certainly it "was" the cheapest by a long way over 5 years.

Hopper1975

Baz wrote: »

Oh dear, you will lose your fee Im afraid.

Best you could hope for would be if they come out with a better fixed rate that you could change to.

What on earth possessed you to think a £3499 fee was a good idea?

That's what I'm trying to do now, so fingers crossed! I was also a bit reticent about it, but was told it was the best deal they had for me at the time.

It depends on your outstanding balance of course, but with the much cheaper rate for this deal compared to any others, it was easily the best deal over timescales of more than a year.

Tinka21

Where did you get the figure of 4.69% from?
On their website it says 6.69% they would have to cut their rates by a whole 2% to get it that low!
I'm getting ready to change my deal with them soon so have been looking into it and I didn't think they had yet made a decision on how much they are reducing rates by.

pfpf

Hopper1975 wrote: »

Yeah it's certainly very high, but the rate was far below anything else I was offered, so I would have made up the difference in about a year. Certainly it "was" the cheapest by a long way over 5 years.

if it was a good deal for you when you accepted it, its still a good deal, take it.

5 years is a long time and int rates may well go up in that time and fixed rates may become much higher.

its a guessing game at best, the £3499 fee would make me go ahead with the deal assuming you would lose the fee anyway.

Baz_2

Hopper1975 wrote: »

That's what I'm trying to do now, so fingers crossed! I was also a bit reticent about it, but was told it was the best deal they had for me at the time.

It depends on your outstanding balance of course, but with the much cheaper rate for this deal compared to any others, it was easily the best deal over timescales of more than a year.

I wouldn;t go on the SVR though, I would hope they come out with a better fix.

If you go on the SVR and they still take the fee you are setting yourself up for a double wammy when the rates go back up above the fix you could have had.

If you can;t get a better fix off them, I would stay with the deal you have signed up for. If they come out this week with a 4.99% fix for example, get them to switch you to that.

At least that way its not giving them £3.5k for doing something you would have done had you done nothing. With your fix, you still get something. Rates won;t be this low forever.

Also, I take it you have had your offer letter? Have you paid the fee? Normally the rates are only guaranteed once the fee has been paid. You need to dig out the terms and see when they constitute the deal being binding.

Maybe you should get an IFA to look into it for you.

amscss

I'm in a semi-similar situation with nationwide but (luckily) have not paid a reservation fee - my new fixed rate of 5.78% is due to start on 1 December, but I spoke to customer service to ask if I can get out and they said I'll just lose my reservation fee (which is zero). I assume it is OK to get out of a fixed rate deal before it has actually started as if I can get out of the fix it will save a lot over the next couple of years at least and would also take large rises in the next few years to result in the fixed rate being better.

Does anyone have experience of accepting a fixed rate deal and then withdrawing from it before it actually starts? - I'm just a little worried that now the ball has started rolling on the fixed deal that it can't be stopped now.

Hopper1975

Tinka21 wrote: »

Where did you get the figure of 4.69% from?
On their website it says 6.69% they would have to cut their rates by a whole 2% to get it that low!
I'm getting ready to change my deal with them soon so have been looking into it and I didn't think they had yet made a decision on how much they are reducing rates by.

RBS/Natwest have stated that they are going to pass on the recent base-rate cuts in full (OK, we can only take their word for it). They haven't made a public announcement as yet so haven't posted the rates on the website as yet. They should go down to 5.19%, not 4.69% as I stated earlier - I was getting "ahead of the curve" there .

adandem

I arranged a fixed deal a few weeks ago to start in December. In my T&C's it says that if I switch to another product with them, I pay ERC, even if the deal isn't in effect. That's with YBS.
I'm no financial expert but I do think that alot of long term fixed rates will be pulled, the same as tarckers or the fees will be much higher.