Ditch Nationwide fix? Help me crunch the numbers.

CovKid_4

We're on a Nationwide fixed-rate mortgage, fixed in November 2008 for five years at 5.78% (yes, with hindsight I do regret this!). Outstanding balance about £106,000 on a house worth around £180,000. Basic payment £772 per month and we're currently overpaying the maximum £500/month. We can currently afford to do this, but plan to have a baby fairly soon, so things might change.

As I understand it, if we bail out of the fixed-rate deal we have to pay a 5% repayment charge (about £5300) and any fees associated with a new product, AND Nationwide won't move us onto any other deal. So they automatically lose us as customers if we choose to do this.

I have always banked with Nationwide, have never paid a mortgage reservation fee with them, and like their flexible mortgage features. However, if we can save a lot by switching, we will do so, and loyalty be damned. I'd be grateful for any help in working out whether we should switch, and if so, what products we could go for (we might be tempted by a tracker, particularly if there's the option to fix later).

CovKid_4

Forgot to mention that we're using the overpayments to reduce the term of the mortgage.

mortgage-adviser-now

If you are saying that having a baby means things might change such that you cannot continue to make overpayments you should not be coming off of a fixed rate.

What happens if you pay an early redemption charge to lose the security of a fixed rate and then base rates go back to 5% or more?

You can't have it both ways. Stick with your current rate (which is competitive for medium term fixed), it gives you the secuirty you need at this time, stop worrying and enjoy your baby.

A bit direct - but if you spot a bandwagon you've usually missed it.

_Andy_

I don't think there's anything to regret. You made what for you at the time was a sound financial choice and will enjoy payment stability for some years.
Personally I think it would be folly to exit for the sake of reducing your payments, whilst increasing the balance of your mortgage by £5000+ straight away.
I would stick and continue to overpay.

CovKid_4

Thanks both. To be honest, I think you're both right... I just need to sit down and talk the issue out with my husband, who has a much more knee-jerk emotional response to these things than I do. He's been reading the Sunday papers and has become convinced that rates are going to stay low for the duration of our fix and that we've done the Wrong Thing.

No baby on the way yet but it's definitely on the to-do list.

dimbo61

Build up your savings as well as overpay maybe 50/50 in ISA,s ( cash ) or regular savers.
Have 6/9 months of income as emergency fund!
GOOD LUCK