Nationwide BMR

Tabatha_Kitten

I have two because of a house move also.
£35k fixed at 5.78% until Oct 2013 and £75k which was at 4.9% but is due to revert to BRM next month.
My payments will come down by around £95 per month.
Am I correct in thinking its best to make this overpayment to the smaller mortgage myself rather than telling Nationwide not to reduce my dd on the larger one ?

bzd

Tabatha_Kitten wrote: »

I have two because of a house move also.
£35k fixed at 5.78% until Oct 2013 and £75k which was at 4.9% but is due to revert to BRM next month.
My payments will come down by around £95 per month.
Am I correct in thinking its best to make this overpayment to the smaller mortgage myself rather than telling Nationwide not to reduce my dd on the larger one ?

Yes you're correct, for two reasons:
1) It has the higher interest rate so overpaying it should reduce the monthly payment by more than if you overpaid the BMR mortgage.
2) Once on BMR you have complete flexibility in payments on that mortgage, whereas the Fixed Rate mortgage will have a maximum of £500 overpayment per month without penalty. If you are ever in the lucky position to overpay more than £500, you won't be able to put it all in the fixed rate in one go, so putting in what you can each month makes sense.

You might want to consider asking Nationwide if they will reduce the term of the Fixed rate when you overpay, rather than reducing the monthly payment (this will mean you can keep future overpayment options to a maximum).

Ben

Tabatha_Kitten

Thank you bzd.
Unfortunately I cant afford to overpay more than that.
Ive been mulling this over for a while and made the decision to let it go to BMR rather than to fix again, and make overpayments to give me a buffer should rates suddenly shoot up, cos lets face it none of us really knows do we ?
The anoying thing with the smaller mortgage is that when we moved house Nationwide made us put the term back up to 25yrs. It could have been down to only 10 yrs left now otherwise :mad:

bzd

The other thing to note with Nationwide is that with overpayments you can apparently claim the money back, or reduce your current payments, to the tune of how much you've cumulatively overpaid which seems very reasonable (one reason I'm with a Building Society rather than a Bank)!

I've never actually asked to do this (anyone else know if this is easy enough)? I'm sure the payment break is less hassle than getting money back though.

Cheers,

Ben

kmmr

Stick with the BMR is my advice. Overpay as much as you can and make the most of it. Those tracker rates will probably never be seen again... at least if the banks have any sense!

aparrott

I'm in a similar situation - My 5 yr Fixed at 5.49% is coming to an end at which point I will go onto the BMR (2.5%). Having done my homework and a bit of crystal ball gazing (!) I have decided it is better to go onto the BMR rather than take out another Fixed and make overpayments to the tune of the difference between the old payment and the new payment (£200) plus a bit more when i can afford it - by doing this if interest rates do rise than any future payments will be buffered by the overpayments (ie., payments shouldn't rise as much as if I made no overpayments - they may even fall). Plus I'll be paying the mortgage off quicker

It is bit of a gamble though and obviously depends upon how much and when the BMR increases. Basically, I've decided to make my money work for me rather than for the bank!

One_Day_Rodney

My fixed ended last year at 5.23%. I have now been on the 2.5% for a year, which has been useful because I have been using the 'surplus' money for home improvements and offset the lack of payrise at work.

I continually look at the new fixed deals, but the real offputting thing for me is the fees - £995 for a 5year deal