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Choice - Nationwide 6.19% 5 yr fix or stay with NR SVR
looster
Posts: 57 Forumite
We have a choice to make and fairly soon. I'd appreciate your thoughts. We are really having trouble deciding, in a complete conundrum.
We have a current mortgage with Northern Rock, 379K outstanding. Our fix has expired and we are currently on their SVR (4.79% at the moment, no news on whether they will drop their rate yet following yesterday's cut). Our mortgage is interest only but now that I've returned to work, we could overpay by anything between £500 to £1500 per month and NR don't limit overpayments. The interest payment is c. £1500 per month but would obviously vary, particularly if rates increased. We can afford on currently salaries up to £2500 most months and sometimes a little more.
However, we do also have an offer from Nationwide based on an application made early August last year for a 5 year fix at 6.19%. This was based on 90% LTV (a little less actually, but above 85%) and on a valuation of £440K. The offer is on the table until 15 April. This is also interest only - payment around £1950 I recall, haven't checked - but we have the option to overpay by £500 per month. Any excess that we could afford to overpay, we will have to save elsewhere - not an attractive prospect given rates on offer.
Historically we have always gone for a fix as we needed that constant payment guaranteed during my maternity leaves etc but we have now finished the family and I am back at work for good, we can take more of a risk. My job is secure, DH's job perhaps less so, who knows but we have insurance linked to his employment that would cover the mortgage for 12 months in the event of redundancy.
There isn't a third option due to our LTV and if we don't take up the NW offer is that we are unlikely to be able to get off NR's SVR for some time until house prices start to bounce back - even if we do make overpayments. Our LTV has crashed through the floor in the last couple of years - house in our street sold for £470K in April 07 and £385K in Nov 08. Both in worse condition than ours and the latter was sold by an owner desperate to sell as had bought a house on a bridging loan a year before. But even so...
Staying on NR's SVR would be affordable even if it went back up to the 7.5% level of last year assuming we retained our jobs but higher than that and we would feel the pinch. If DH was asked to work a 4 day week, a possibility if a remote one, we would be able to afford the NW rate.
Until these recent drops, we were going to proceed with NW offer - but not sure now, particularly if NR drop their rate further. It seems we could really take advantage of our ability to overpay on a lower rate for a little while - I looked at an overpayment calculator and had a play around and the impact on on our capital owing is substantial. I know that nobody can predict the future - so many variables we are trying to contemplate - rates, house prices, economy - but I would really be interested on what you would do faced with this decision.
DH is for sticking with SVR and overpaying, take the future as it comes. My dad is with him on this one and I tend to trust his instincts. But I am I just swinging back and forward - I am more risk averse than DH, if I had listened to him we would have taken up Nationwide's offer of a tracker last July and been in a much better position but at the time, on maternity leave, I was just all about minimising the risks and playing safe.
We have a current mortgage with Northern Rock, 379K outstanding. Our fix has expired and we are currently on their SVR (4.79% at the moment, no news on whether they will drop their rate yet following yesterday's cut). Our mortgage is interest only but now that I've returned to work, we could overpay by anything between £500 to £1500 per month and NR don't limit overpayments. The interest payment is c. £1500 per month but would obviously vary, particularly if rates increased. We can afford on currently salaries up to £2500 most months and sometimes a little more.
However, we do also have an offer from Nationwide based on an application made early August last year for a 5 year fix at 6.19%. This was based on 90% LTV (a little less actually, but above 85%) and on a valuation of £440K. The offer is on the table until 15 April. This is also interest only - payment around £1950 I recall, haven't checked - but we have the option to overpay by £500 per month. Any excess that we could afford to overpay, we will have to save elsewhere - not an attractive prospect given rates on offer.
Historically we have always gone for a fix as we needed that constant payment guaranteed during my maternity leaves etc but we have now finished the family and I am back at work for good, we can take more of a risk. My job is secure, DH's job perhaps less so, who knows but we have insurance linked to his employment that would cover the mortgage for 12 months in the event of redundancy.
There isn't a third option due to our LTV and if we don't take up the NW offer is that we are unlikely to be able to get off NR's SVR for some time until house prices start to bounce back - even if we do make overpayments. Our LTV has crashed through the floor in the last couple of years - house in our street sold for £470K in April 07 and £385K in Nov 08. Both in worse condition than ours and the latter was sold by an owner desperate to sell as had bought a house on a bridging loan a year before. But even so...
Staying on NR's SVR would be affordable even if it went back up to the 7.5% level of last year assuming we retained our jobs but higher than that and we would feel the pinch. If DH was asked to work a 4 day week, a possibility if a remote one, we would be able to afford the NW rate.
Until these recent drops, we were going to proceed with NW offer - but not sure now, particularly if NR drop their rate further. It seems we could really take advantage of our ability to overpay on a lower rate for a little while - I looked at an overpayment calculator and had a play around and the impact on on our capital owing is substantial. I know that nobody can predict the future - so many variables we are trying to contemplate - rates, house prices, economy - but I would really be interested on what you would do faced with this decision.
DH is for sticking with SVR and overpaying, take the future as it comes. My dad is with him on this one and I tend to trust his instincts. But I am I just swinging back and forward - I am more risk averse than DH, if I had listened to him we would have taken up Nationwide's offer of a tracker last July and been in a much better position but at the time, on maternity leave, I was just all about minimising the risks and playing safe.
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Comments
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lots of views of the thread but no replies - anyone got any thoughts?0
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379k at 6.19 now geez.
I have no comment other than. Any money you have spare hide it away. ;-)0 -
Ive just spoken to a guy at northern rock who says they are going to be "lending" to existing customers and details will be out during March. He could not give any other details so i think ill hangfire on the NR SVR until details come out (he did says that for existing customer up to 90%LTV). Not sure how much that my help your individual circs but it might be worth speaking to NR and see what they say.0
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Stay with the SVR at the moment and overpay every penny you have spare to reduce your debt.
With another cut in the BOE base rate yesterday I would see what NR come up with in the next few months as the NW offer is now six months old and the mortgage market has changed alot!!
If you can get a 5 year fix for 5/5.5% then consider it very carefully with your LTV but for now OVERPAY,OVERPAY and OVERPAY as no savings rate will match your mortgage cost. GOOD LUCK0
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