Drawdown rates for fixed term mortgage

MissPiggy_3

My husband and I currently have a mortgage with Nationwide. Our fixed term expired a few months ago and we are now on their standard variable rate paying 2.5%.

We have recently applied for a five-year fixed term mortgatge with HSBC at 4.99% and have just recevied the mortgage offer. The terms and conditions state that "the Agreement will be cancelled if First Drawdown does not take place within 6 months of the date the fixed interest rate funds were booked".

My questions are:

When are fixed interest rate funds booked?

Could we potentially stay on Nationwide's SVR up to another 6 months, thus benefitting from their very low interest rate, then take up the HSBC fixed term mortgage at the end of the 6 months (depending on when the fixed interest rate funds were booked), or if Nationwide's SVR goes above 4.99%?

gowgowuk

Hi, I am exactly in the same situation as you: Nationwide mortgage coming to an end and just booked a 5 years fixed rate HSBC mortgage this week (lucky enough to get a rate of 4.24%). That's my understanding that you can indeed wait for up to 6 months before switching to HSBC. Not sure about the exact date. My guess would be the day you paid for the booking fee (for me last Thursday). In my case, I decided to take draw down the money on the 1st of December, in order to avoid potential complications if the switch over happens during the Christmas period!

MissPiggy_3

Thanks gowgowuk. That's good to know that it is indeed possible. Our situation is slightly different in that our mortgage has no booking fee, so I might give HSBC a call to clarify the situation and when the draw down date is.

TeddyBear_2

Well done, MissPiggy and gowgowuk for shopping around and finding a mortgage deal elsewhere that suits you! In my ongoing grievance about Nationwide not looking after existing customers, I feel it's a shame for you that they didn't offer you a deal to keep your custom, and whilst they clearly embrace new business, they may live to regret the ethos of same deals for new and existing customers alike when their long-standing existing customers walk throught of the revolving door they've effectively created. Still, what is Nationwide's loss is HSBC's gain!

nrsql

I'm doing a similar thing. First Direct 4.09% 3 yr, currently 1.39% with Birm Midshires.
I called to discuss the mortgage and had a call back a few days later to explain the terms. After that I had 5 days to call and confirm and pay the arrangement fee £99. I did that and at that point had 6 months to complete the mortgage.
They say it takes 8-10 weeks to complete so I guess I'll be sending in the application form in about 3 months.

It will be 6 months after you confirmed that you would be taking up the mortgage and paid an arrangement/booking fee - but I think it will include the time it takes them to set it up so allow a couple of months for that.

trynsave

I have just completed on my mtge deal after arranging it back in February.

I got all the forms signed, documentation provided etc, back in Feb, but when the solicitor contacted me I just advised that completion wasn't to take place until 01/07/09, due to ERC penalties up to and including 30/6/09.

If I were you I'd do all the leg work now and just sit back and wait - unless you think there may be a better rate out there for you in 6 months time????

MissPiggy_3

Thanks all for your responses. It's good to know that it is possible to defer taking up the new HSBC mortgage - might as well feel the benefit of Nationwide's low SVR for as long as possible!

trynsave - I agree that it's probably best to do the leg work now and sit it out. It is always a bit of a gamble trying to work out when the best rates will be, but I'm happy with the rate we've secured for the next 5 years.

nrsql

MissPiggy wrote: »

Thanks all for your responses. It's good to know that it is possible to defer taking up the new HSBC mortgage - might as well feel the benefit of Nationwide's low SVR for as long as possible!

trynsave - I agree that it's probably best to do the leg work now and sit it out. It is always a bit of a gamble trying to work out when the best rates will be, but I'm happy with the rate we've secured for the next 5 years.

I'm assuming that rates will go up rather than down (otherwise we wouldn't be fixing).
The issue is when rate goes up and by how much.
I think these 5 year deals should at least break even but my 3yr might be touch and go. Needs boe rate to be above 3.20% to start being beneficial.

Seen a lot of opinion that the rate won't start going up until mid next year - I think it will be earlier when RPI rises towards the end of the year.

Could be talking myself out of this - but think I'll only lose £99 if I don't take up the deal so will decide in a couple of months.