Coming off Nationwide BMR

Z1ppy_2

Afternoon.

We are on the Nationwide BMR (2.5% currently) and looking for a little more security in what may be a changing market. our mortgage currently is £144K

We want to stay with Nationwide for a number of reasons and having spoken to them, they have offered the following options

Variable tracker capped to 3.99% for 2 years. (currently 2.99%)

Fixed for 3 years 4.9 %

Fixed for 5 years 6.4%

all have a £1000 arrangement fee.

offers can be booked for 3 months before rates start so we could in theory book now and start whichever option end september.

of course, my crystal ball isnt working today so no idea what interest rates will be in 2 years time but my rough calculations suggest if we take option 1 we by sept 2011 our mortgage would be £3k less than if we took option 2 and £7k less than option 3.

however, on the basis that after 2 years rates are at 10% and projecting forward after 3 years, option 1 and 2 would be almost the same, and after 5 years, option 2 would have allowed us to pay off an extra £1000 whilst affording us the apparent comfort of 3 years fixed in the first place.

sorry for so many words but could someone wiser than i suggest if i am missing something obvious and making my calculations incorrect?

thanks in advance!

ginvzt

What is your LTV? Because the 6.4% 5 year fixed sounds like a lot to me!!!!

Z1ppy_2

well speaking to the lady on the phone initially they said we would need to remain on BMR as LTV was over 95 %. that said, we have Circa 40K avaliable which could be placed against this mortgage to reduce the LTV.

Current market value of the property (realistic) is around 155 / 160K

ginvzt

Well, if you pay off £40k, it would bring your LTV down to 67%, assuming that your house is worth £155K. I am sure you could find a much better deal than 6.4% for 5 year fix, if you went elsewhere. A quick look on FSA website, shows plenty of mortgages below 5%.

If you really have to stay with Nationwide, their website lists 6.14% for 5 year fixed with 25% deposit (75% LTV).

It looks like big number, but I still would be tempted to go for a 5 year fix - I am not too optimistic about what will be available in 2-3 year time... And then there would be a second lot of the 'set-up' fees.

PIDGE3

At the moment i think the bmr rate which is guaranteed not to be more than 2% above the base rate is a good option to stay on as there is no arrangement fee to pay and its flexible .Interest rates will have to go up a fair amount for it to be more expensive than a fixed rate .Also once you come off the bmr rate you cannot go back to it at a later date ,next best is svr at 3.99%.