nationwide switch and fix or not?

cranezoe

hi,

we fixed for 5 yrs which is now coming to an end in Nov. we moved 8 months ago and borrowed the extra on a variable rate and can switch and fix that whenever.

Not sure if we should switch and fix to make one big mortgage or keep them running seperately or what to do at the moment really.

we've been paying 5.89% for the last 5 yrs on the big part of our mortgage. Nationwide wrote to us saying we could take up the following fixed rates:
2 yr fixed at 4.29% with no fee or 3.89 with £495 fee or 3.79 with £995 fee.
3yr fxed at 4.49% with a £995 fee

or we could stay on the bmr. from reading on the web is that 2.5%? only I got a bit confused as the leaflet said that if we fixed this tim round we'd then end up on the smr which is 3.99% ?

we have £100k outstanding on the fixed rate bit and £30k on the additional. house is worth about 165k according to them, we paid £160k 8 months ago.

what should we look at doing here?

other info - Im about to go on maternity leave in november for a year. Im going back to work after that on the same level etc but wondered if that would affect our borrowing if we decided to fix during that period of time?
when we gt our mortgage 5 years ago we were both working part time, now I part time. this didnt have an effect when we wanted to borrow the additional though, presumably as we both had wage increases and so jointly bring in about what we were when both full time.

thaks guys.

Gorgeous_George

The bmr is 2.5% and is tied to the BofE base rate (Nationwide promised that it would never be more than 2% above BofE base rate). This is the rate that you will default to.

The smr is a new rate that they have introduced because they didn't anticipate BofE base rates falling as low as 0.5%. It is not tied to the base rate.

All the options are more expensive than the 'do nothing' option. Unless you need the security of knowing your mortgage repayments for a fixed period, I would do nothing.

Most commentators do not expect BofE base rates to move much higher for the next few years. Commentators can be wrong but any rise is likely to be gradual and you could fix later if you lose your nerve or if rates start to edge upwards. Put the savings to one side (perhaps in cash ISAs or monthly savings accounts).

GG

koexelek

cranezoe wrote: »

hi,

or we could stay on the bmr. from reading on the web is that 2.5%? only I got a bit confused as the leaflet said that if we fixed this tim round we'd then end up on the smr which is 3.99% ?

.

Nationwide are deliberately trying to confuse existing borrowers into not going on to the 2.5% svr..... because it is so damned good :cool:

stedwell

Thank you
My fixed rate is due to end in December. So it is better to do nothing which means I go onto a variable rate???

Gorgeous_George

Only if you do not want the certainty that a fixed rate would bring.

GG

cranezoe

thanks for your help guys. we'll leave the mortgages running separately for a bit. Our payments will be £200 less a month from next month then! and we'll carry on putting that money into the mortgage as overpayment and keep our eyes on when to maybe think about fixing.

koexelek

With Nationwide, you also have the facility to draw overpayments back again if you need to

showmethesheckle

Hi ,

I have two mortgages running with Nationwide both on the 2.5 % base rate ( one was ported over and both fixed rate deals have ended)

The lower payments are fab and much as i would like to overpay i cant manage that right now.

Do you think the base rate will stay low for years.I was thinking of re mortgaing in the spring and borrowing a little extra for some home improvements.

However if i'm going to be sitting at 2.5 % for a considerable time it seems crazy to come off.

Any ideas