Nationwide Fixed or Base Mortgage rate?

freeasabird

My 2 year fixed rate mortgage deal of 5.37% expires on 31st March 2009. As of December, the remaining mortgage term is 8 years and 3 months. As of December I now owe £38,721.41.

Among the deals Nationwide are offering are a base mortgage rate of 3.50%. I currently pay £485.47 a month so my payments will go down by £34.15 (although I will probably pay the same amount to get the mortgage paid off quicker).

They also have a five year fixed rate of 4.88% which is £475.90 a month. However there is a reservation fee of £299.00. If my calculations are right, that’s roughly £24.92 month so the total figure to pay will be £500.82. That’s an extra £15.35 a month, which over a year is an extra £184.20 a year.

The base mortgage rate won’t last forever so a good fixed rate deal would be attractive to me especially if it’s at a good rate. However, I’m not sure whether a fixed rate of 4.88 % is a good deal especially with a reservation fee of £299.00.

Help!

Robert_Sterling_3

freeasabird wrote: »

That’s an extra £15.35 a month, which over a year is an extra £184.20 a month.

Think again.

One_Day_Rodney

I'm a bit confused :huh:

The £299 is a single fee. Not £299 per year, every year, which is what your calcs seem to show.

Even if you add the £299 to your current mortgage balance and pay for it over the remaining term, it is less than £4 a month extra.

Or am I missing something?

nesssie1702

Don't add the reservation fee to the mortgage - pay it up front either in cash or on a credit card. If you do drop onto the BMR rate for a couple of months, then use the "savings" in your payment to save up for the reservation fee.

Have you used the Nationwide Mortgage switcher facility?

https://secure.nationwide.co.uk/mortgageswitcher/

I'm with the Nationwide and my 5 year fix comes to an end in Jun 09 - I've already checked out what's available and the £299 arrangment fees only apply to existing customers. New customers would have to pay a fee of £999

freeasabird

nesssie1702 wrote: »

Don't add the reservation fee to the mortgage - pay it up front either in cash or on a credit card. If you do drop onto the BMR rate for a couple of months, then use the "savings" in your payment to save up for the reservation fee.

Have you used the Nationwide Mortgage switcher facility?

https://secure.nationwide.co.uk/mortgageswitcher/

I'm with the Nationwide and my 5 year fix comes to an end in Jun 09 - I've already checked out what's available and the £299 arrangment fees only apply to existing customers. New customers would have to pay a fee of £999

Thanks Nessie,

That's a good tip about using the "savings" as you say to save up for the reservation fee. Your helpful post is much appreciated. When I took out the mortgage, I didn't have to pay a reservation fee and I'm still don't know why the banks charge this. It may be a one off fee but it's still money that I will have to pay and as the interest rate has gone down even further, is 4.88% for a five year fixed rate a good deal under the circumstances? Decision, decisions.

freeasabird

Robert_Sterling wrote: »

Think again.

I've edited my original post. Do you have anything more interesting to write than pointing out mistakes?

dimbo61

little bit of guess work !!
You owe £38,72.41 on 31/12/2008 yes and make 3 more payments in Jan,Feb & Mar 2009 so mortgage balance is say £38,000 at 31/03/2009.
Pay £299 out of savings and take 5 year fixed rate deal with Nationwide at 4.88% OVER 5 years !!! cost £715.02 a month and you would pay £4901 in interest.
4.88% OVER 8 years cost £478.91 a month and you would pay £7975 in interest.
So can you afford £715 a month and be Mortgage Free 3 years early and save over £3000 in interest and no more mortgages to sort out!

freeasabird

dimbo61 wrote: »

little bit of guess work !!
You owe £38,72.41 on 31/12/2008 yes and make 3 more payments in Jan,Feb & Mar 2009 so mortgage balance is say £38,000 at 31/03/2009.
Pay £299 out of savings and take 5 year fixed rate deal with Nationwide at 4.88% OVER 5 years !!! cost £715.02 a month and you would pay £4901 in interest.
4.88% OVER 8 years cost £478.91 a month and you would pay £7975 in interest.
So can you afford £715 a month and be Mortgage Free 3 years early and save over £3000 in interest and no more mortgages to sort out!

Not a bad idea, it would be a bit tight but I can afford £715.00 a month. I took out the mortgage to cover a major works charge on my mum's flat. (We're leaseholders). In five years time, we could be mortgage free and I could even get my own place. There might be light after being in a dark and very miserable tunnel. Thank you.

goosander

Alternatively take out the 8 year mortgage you originally intended (or even 10 years) and treat it like a 5 year one by over paying. That way you then have the flexibility to not over pay if things are a bit tight one month, and have the potential to borrow back your over payments if things ever get really bad (i.e. loss of job).

Given that your mortgage doesn't have too long to run, you could also consider staying on the SVR for now and take advantage of the lower rate to boost your over payments. I reckon that rates will remain low for the next 12 to 18 months, and you might well get most of your mortgage paid off before they increase above the level of current fixed rates. Whether or not this would work for you depends on your circumstances and attitude to risk, but I might be tempted to stay on SVR for now and look to fix if the rates go up again.

Robert_Sterling_3

Robert_Sterling wrote: »

Think again.

Thank you for thinig again. :T :T :T

Dan_Stevenson

It is very interesting reading the above thread. I am in a simalar position but I still owe £125k on my mortgage over 27 years!! My 2 year fixed rate ran out in Sept and I am now just on the Nationwide variable base rate. This is working quite well for me at the moment as the interest rates are going down but I am looking for a fixed rate deal at around 3-4% which I can fix for a long period. Is this the right thing to do? What advise can you give?