Nationwide Tracker - incorrect new payment?

caldimerda

I received the "notice of mortgage rate change" from the Nationwide today and was surprised the repayment had reduced by so little - given the new rate was 3.33% down from 4.83%.

Checking the previous rates and payments and calculating (literally) on the back of the envelope, I'd say the payment is not based on the 3.33% rate shown. At a guess it could be 3.83%.

Has anyone else been surprised that their payment has gone down by so little?

beecher

If you post details of your mortgage and length of term, someone will be able to check the figures for you.

sportbeth

I'm still waiting for the letter from the Nationwide. Good to see they're getting round to it. Will double check the figures when they come through though

luckyfool

If your mortgage is capital and interest you may be surprised at at how little the repayment drops.

caldimerda

Well, hoping to avoid scrutiny of my math - but since you ask:
I have just under 24 years of a 25 year repayment mortgage - a two year tracker from Nationwide, at (now) 3.33%. Outstanding capital is 89200.
Payment this month was 735 @ 4.83%, indicated payment next month is 668 @ 3.33%.
I based my calculation on a fixed repayment amount and a variable interest payment - and that assumption has been good for all previous adjustments.

beecher

I don't understand. Your mortgage would have to be over £120,000 to require paying back £735 over 25 years at 4.83%. Unless I've misread.

caldimerda

Many apologies - that term should be just under 14 years, not 24. Forgot I knocked 10 years off when I last remortgaged.

caldimerda

I guess I should have thought this through a little better. Might it be that for some reason (eg. the outstanding term has last month reduced by 1 year, or outstanding loan value dropped below a threshold value - 90K) now the Nationwide have upped the repayment component of the monthly amount?

beecher

Your outstanding term won't have dropped as far as the payments are concerned - were you on a 15 year term when you last remortgaged? You'll stay on that as far as calculations are concerned until you next remortgage/get a new deal. Same goes for your outstanding loan - the calculations use the outstanding amount as of the time of your last remortgage, not the balance as it goes down.

Given those figures, you'd be paying about £665/month at 3.33% so it sounds about right.

nick1977

Looks about right to me.
Try entering your figures in here:

http://news.bbc.co.uk/1/hi/business/7042204.stm