Nationwide mortgage options

spdavies

Hi folks,
Please can you give me your thoughts/ advice on the following.

I currently have a nationwide tracker mortgage which comes to an end on 30th Sept 09. The loan remaining is 130,590.

This was originally borrowed against a value of £186,000. Nationwide using their quick calculator now tell me that they value my house at 157k but would be prepared to accept £170k given the home improvements (76%LTV).
The attraction of staying with N'wide is that they would not do a re-valuation or a credit check again removing some of the hassle. They can just do a straight switch. The best offers that they have offered me are:

Option 1: Stay on the Base rate of 2.5% at £541 per month

Option 2: 3yr fixed at 4.49% which including arrangement fee of £995 means monthly repayment of £689-74 (note: i might have liked to fix for 5years but the rates are sky high 6.84% unless my LTV is <75%)

Option 3: 3 year tracker at 3.99% (3.49% above BOE) capped at 4.99% meaning monthly repayments of 650 to 726.

My circumstances are that money is fairly tight hence the attraction of a fixed or a capped but i could afford the full capped if needed.

Questions:
1) What is the general view about interest rate rises. The market seems to be slowly making a recovery - should i be concerned about a sharp interest rate or is the considered view that it might be more gradual and therefore staying on the base rate option might reap rewards for a while?

2) Whilst i am sure that there may be slightly better offers if i shop around. Overall do these seem good value?

3) is a three year term a sensible thing to do in the current climate (i'm worried it neither gives me long term security or short term gain)?

4)Which is the best option to go with from the above list?

All thoughts welcomed - especially from you clever financial adivsors folks!!!

Thanks in advance

koexelek

Option one all the way for me

Nationwide have recently admitted that their 2.5% SVR ( which they have to offer to most borrowers at the end of their deals) is killing them financially, and they are desperate to get borrowers off of it.
My heart bleeds for them :cool:

Mrs_Bumble

As Koexelek says above the SVR is very attractive and may give you the opportunity to overpay perhaps, but however if Nationwide decide to increase the SVR how long can your budget cope with the increases, what alternative interest rates would be around at that point?

So if budget is a concern for you then the capped rate doesn't look bad, what is the fee for it?

koexelek

Mrs_Bumble wrote: »

As Koexelek says above the SVR is very attractive and may give you the opportunity to overpay perhaps, but however if Nationwide decide to increase the SVR how long can your budget cope with the increases, what alternative interest rates would be around at that point?

So if budget is a concern for you then the capped rate doesn't look bad, what is the fee for it?

Also, if you overpay with Nationwide, you can redraw the funds back again, if you need to.

Little_Miss_Penny_Less

Can I ask you how you persuaded Nationwide to give you a higher valuation due to home improvements without having to pay for a valuation?

We are in the same situation - fixed rate ending 30th Sep, value of house Nationwide are telling us is much lower than we bought at which is limiting our LTV options.

We have an appt with the mortgage advisor tomorrow, so any advice on getting them to increase their value of our house would be much appreciated!

belfastgirl23

No brainer for us as well, we're sticking with the SVR of 2.5% and stashing the rest of the cash. But we have been OPing so should be able to manage a rise in interest rates and it's different if your budget is tight. The good thing about the 2.5 though is that it is pegged 2% above BoE so won't suddenly go through the roof over night.

if you really want security don't forget you can reserve a fixed rate 90 days in advance and then sit on the SVR in the meantime. So you could reserve a rate now for 7th October

spdavies

Little_Miss_Penny_Less wrote: »

Can I ask you how you persuaded Nationwide to give you a higher valuation due to home improvements without having to pay for a valuation?

We are in the same situation - fixed rate ending 30th Sep, value of house Nationwide are telling us is much lower than we bought at which is limiting our LTV options.

We have an appt with the mortgage advisor tomorrow, so any advice on getting them to increase their value of our house would be much appreciated!

Basically they asked me how much did I think my house was worth and I told them. I said i believed it had dropped to about 160k (thir quick calc siad 157) but I had spent £10k on house improvements in that time (Fact) and she said ok then £170k seems fair?? She said that i could pay for an independant surveyor quote as well If i wanted to but i don't see the point.

spdavies

belfastgirl23 wrote: »

No brainer for us as well, we're sticking with the SVR of 2.5% and stashing the rest of the cash. But we have been OPing so should be able to manage a rise in interest rates and it's different if your budget is tight. The good thing about the 2.5 though is that it is pegged 2% above BoE so won't suddenly go through the roof over night.

if you really want security don't forget you can reserve a fixed rate 90 days in advance and then sit on the SVR in the meantime. So you could reserve a rate now for 7th October

Ok thanks to everyone who has posted so far. I must admit my gut feel was to stick with the 2.5% SVR but i was worried that i was being greedy. I mean i fully expect rates to rise in the next five years but i think the BOE would be shot if it rose rates too quickly and that'll give us time to arrange a deal when the trend looks like rates are rising (admittedly we might miss out on current rates but it won't by by much as long as i stay on top of it will it?)

One thought at this stage though?? Are there any tie ins to the SVR rate or can i just switch off it at any stage??

purplebuzz

spdavies wrote: »

One thought at this stage though?? Are there any tie ins to the SVR rate or can i just switch off it at any stage??

There are no tie ins on the SVR (BMR - currently 2.5%) rate, but remember that once you take a new deal, when that comes to an end you will revert to their new SMR which is currently 3.99% and not linked to the base rate

smk77

Mrs_Bumble wrote: »

As Koexelek says above the SVR is very attractive and may give you the opportunity to overpay perhaps, but however if Nationwide decide to increase the SVR how long can your budget cope with the increases, what alternative interest rates would be around at that point?

The SVR ( or BMR for Nationwide mortgages) for most is no more than 2% above the base rate. So, nationwide SVR is currently as high as they can put it.

Mine finishes at the end of this month and I am sticking with the SVR. I got a letter through today telling me that my payments were going to be a few £ more than I had worked out using a few online calculators. I phoned up and explained this and was told the formula that they used. Using their formula I got the same as the online calculators. So, basically, the amount Nationwide stated on the letter was possibly incorrect. They are looking into it and will send out a letter with an adjusted figure or an explaination.

If anyone is coming to the end of their Nationwide mortgage then I suggest that you double check the figures. If they don't add up then either contact Nationwide and get an explaination or send me a PM in a week or so and I'll let you know what Nationwide's explaination is.

Little_Miss_Penny_Less

spdavies wrote: »

Basically they asked me how much did I think my house was worth and I told them. I said i believed it had dropped to about 160k (thir quick calc siad 157) but I had spent £10k on house improvements in that time (Fact) and she said ok then £170k seems fair?? She said that i could pay for an independant surveyor quote as well If i wanted to but i don't see the point.

Thanks SP, I'll see what the mortgage advisor says today, but you've given me some much needed hope!