Nationwide mortgage - fixed term ending

LittleG_3

My partner and I are coming to the end of a 2 year fixed deal with Nationwide (5.48%). It finishes in April 2009 and I’m guessing that our LTV at that point will be just over 75% which means that there aren’t many attractive deals available to us.

Am I right in thinking that we’ll automatically go onto Nationwide’s base rate mortgage which is 3% at the moment? If we do this can we reschedule the mortgage over fewer years or are we stuck to the current term? (18 years left to go). We’d only want to knock a year off it.

Obviously 3% is very tempting compared to the 5.48% we’ve been paying. And if we fixed it again we’d be paying more than 5.48%. Can anyone see any problems with us biding our time for a few months and only moving the mortgage to a fixed or tracker if rates start moving up again? We have been overpaying a bit on 5.48% so could overpay even more on 3% which would obviously improve our LTV and hopefully make better fixes and trackers available to us in the future.

Any thoughts would be gratefully received.

feisty1

The effect of overpaying does reduce the term..........If and when you go to rmtg tell the adviser how much you can afford monthly then they will caculate from their what this means in yrs

luckyfool

Nationwide BMR is not 3%, but 4% currently.

LittleG_3

Thanks! That's 2 things I've learnt already:T

SmileyG_2

LittleG wrote: »

Am I right in thinking that we’ll automatically go onto Nationwide’s base rate mortgage which is 3% at the moment? If we do this can we reschedule the mortgage over fewer years or are we stuck to the current term? (18 years left to go). We’d only want to knock a year off it.

Obviously 3% is very tempting compared to the 5.48% we’ve been paying. And if we fixed it again we’d be paying more than 5.48%. Can anyone see any problems with us biding our time for a few months and only moving the mortgage to a fixed or tracker if rates start moving up again? We have been overpaying a bit on 5.48% so could overpay even more on 3% which would obviously improve our LTV and hopefully make better fixes and trackers available to us in the future.

Any thoughts would be gratefully received.

Hello LittleG

Nationwide's Standard Variable Rate falls to 4% (not 3%) on Jan 1st. Anybody finishing a current deal will automatically go onto this rate.

Nationwide have also stated that this rate will be no more than 2% above Bank of England base rate. If the base rate falls to 1%, this could mean an SVR of 3%.

My suggestion would be to move to the SVR in the current climate until you see a tarcker or a fixed rate that you are comfortable with and then fix for a long as you can. If base rates fall to 1%, a fixed rate of around 4% looks good value but only if you can get it for 5 years.

My philosophy since 2001 is to budget a fixed amount for my mortgage. If base rates fall and hence your monthly payments then I would seriously recommend that you overpay whatever amount you can afford.

Check with Nationwide, but I believe they will allow you to 'borrow back' any overpayments you make.

In the meantime you are reducing your LTV.

Let us know what you decide.

SmileyG

DerekH

Not posted here before so not sure if this is the right place! Pplease advise if not.

I recently had a letter from Nationwide saying we would be transferring onto their Base Mortgage Rate in March at the end of our current tracker deal which had transferred to them from Portman when they were taken over. THIS IS WRONG!! I have a written contract, formally accepted, which clearly states that at the end of the first product (tracker + 0.29%) we move to another tracker though at a slightly worse diferential (+0.75%) which is better than I could get anywhere else at present! I wrote to them and have just had a call to confirm that our contract stands and the Nationwide will honour that contract. They said the letter I (along with others) received had been sent out in error!!! I asked if other people who had been sent that letter in error would have a further letter now to put them straight but I was told no! So many people may have had this letter and be thinking they will move to the BMR or be persuaded by a mrogage broker to move to a worse rate or pay to move to another rate. This to me seems wrong and I shall be writing to the Financial Services Authority about it. I wanted to alert others as soon as possible however hence this post.

feisty1

I hope you managed to get the full name (not just john) of the person who you had this conversation with!

JayZed

LittleG, I agree with SmileyG's advice (are the two of you related?!). Stay on the SVR (currently 4%) for a few months, and look out for attractive fixed rate deals coming onto the market.

As for reducing the term, all you need to do is call the Nationwide and inform them that you want any overpayments to reduce the term rather than the required monthly payment (which is the default option). If you're already overpaying, then if you keep on paying the same as you are now you should be able to knock a good chunk off - it will also improve your LTV so hopefully you'll be in a position to get better (sub-75% LTV) deals.