Should we exit early?

lunagirl_2

Hi there

Looking for some advice (as per!) have a 2yr fixed with nationwide at 6.59% which is due to finish Aug 2010. Our house was bought for £120k in Aug 08 and we put down a 10% deposit. We should have went with a tracker mortgage but we were first time buyers and was an error!

Anyways paying £670 a month in repayments and whilst we can afford it (just) its pretty steep. As the fixed is due to end in 2010 i was going to try and re negotiate a 5yrs fixed or similar with nationwide at a lower rate..meaning they have us for longer OR i was going to exit early and try and get a better deal elsewhere, my exit fees are 1.5% of mortgage.

Any advice? Are we silly and should ride it out till next Aug? We got the house for a good price and shouldnt be in -eq.

Advice appreciated, thanks, Claire

beecher

Although you might not be in negative equity it is unlikely that you have a 90% LTV which you need to get a deal elsewhere. With exit fees of over £1500 and the likelihood of paying £999 in fees for a new deal I can't see it being worthwhile anyway.

I just had a look on Nationwide's website and although they do give new deals for existing customers with only 5% equity, a 5 year deal is 7.28%. You'd have to have at least 25% equity to get a lower deal than you are on right now. I don't think they allow you to come out of the deal early and fix another anyway.

If you can only just afford your mortgage at the moment, I'd suggest going onto the Debt Free Wannabee forum for help in cutting your other household bills.

NAR

Your exit costs are £1620, so that is your target savings with a new fixed (tracker!). You may be able to achieve that. Get them to supply you with illustration figures.

nw_man

NAR wrote: »

Your exit costs are £1620, so that is your target savings with a new fixed (tracker!). You may be able to achieve that. Get them to supply you with illustration figures.

No it isnt as any new deal is likely to have arrangement fees, more than likely in the region of £1000.

NAR

nw_man wrote: »

No it isnt as any new deal is likely to have arrangement fees, more than likely in the region of £1000.

ok plus costs of £1620 = £2620. Divided by 12 = £220pm approx. So if any new deal is less than £450pm (£670-£220) then the OP should go for it.

lunagirl_2

And whats the best way to do this - go to nationwide or apply for new mortgage?

Does it affect credit rating applying for mortgage?

Doh!

beecher

lunagirl wrote: »

And whats the best way to do this - go to nationwide or apply for new mortgage?

Does it affect credit rating applying for mortgage?

Doh!

No point in going to nationwide when their 5 year fixed rate is higher than what you're paying at the moment. You could phone them up and ask what they value your house at to give you an idea of what your LTV might be - would be surprised if it is below 90% which means you're stuck.

Joe_Bloggs

My Nationwide mortgage will revert to the old Nationwide BMR next June. The BMR will track the Bank of England Base rate by +2%, hence 2.5% at present.

Those on a fixed rate prior to May 2009 will revert to a (BMR) tracker rate without any fees. Those who have taken out mortgages during and after May 2009 will revert to the Standard Mortgage (SMR) rate currently 3.99%. Check your documentation if in doubt.

There does not seem any means of gauging what this SMR rate or many other SVR rates of other lenders will be determined by.

The Nationwide may find it in their interest to tempt those who are about to fall onto the BMR with a fixed rate offer.

I am going to stick with the BMR as I have savings that I can throw at the mortgage if rates go up. And I can make savings whilst their BMR is less than their alternative mortgage products.

J_B.