nationwide mortgage

peerlessgt

I'm sure the answer is no, but if i pay to get out of my mortgage agreement (currently 3 yrs left at 6.18%) can i go onto the nationwide base mortgage rate of 2.5% (as i took out my mortgage before 30th april 09). It's capped to go no higher than 2% above base.

TrickyDicky101

When you say "pay to get out of it" how do you mean? If you mean pay off the mortgage and take out another with Nationwide then no, as the second would then be on their new terms (ie the SVR rather than the BMR) and you'd be paying the early termination fee too. I don't know if they make provision to allow you to pay an upfront fee to get out of the fix and go on to the BMR, but I would presume the cost of this would reflect the difference in fixed rate less BMR which means you wouldn't actually save anything even if it was available.

dimbo61

You dont want to do that and in 3 years interest rates will have gone up but you can overpay by £500 a month and this will at least reduce the debt.
Paying the ERC will cost you thousands which would be better used to overpay

opinions4u

The answer is no. They might let you go on to another product, but you'd be signing away your right to the 2.5% rate.

But you could pay to get out of it and remortgage elsewhere.

Current value of property?
Current balance?
Size of penalty clause?

It might not be cost efficient, but posting the above detail would help posters help you.

_Andy_

Nationwide don't allow customers to do that.

peerlessgt

Thanks for your replies. I can't get my head round the maths involved but hope someone out there can make my situation a bit clearer. I am buying a house for 245k putting down 73.5k deposit which leaves me with a mortgage of 171.5k which is a LTV of 70%. I have an existing Nationwide 5 yr fixed at 6.18% with 3 years remaining. To remortgage at a better rate i'll have to pay 3k (which i have in savings). So i was going to pay 3k and get a 2yr fixed at 3.19%, thus reducing my payments significantly. But as a direct comparison should i stay on the 6.18% rate for the remaining 3 yrs and use the 3k to overpay, i can overpay 1k per month (for 3 months obviously) nationwide allow you to overpay £500 per month, but i have a mortgage and further advance so i can overpay 500 on each. I'm basically paying 3k to get out of a 6.18 mortgage and gain from lower monthly payments, or should i stay and use 3k to overpay? Thanks.

TrickyDicky101

Are you sure of your numbers? When I looked into paying off my Nationwide fix early, with 3 years to go it would have been 3% of the overpayment - which in your case would be 3% * 171k ~ £5k. Even so, were you able to go onto the BMR and base rates not move for 3 years then you would probably be better off. But that's a very big if (base rates staying the same). If instead you had to go onto the SVR it would be much worse. If you intend to arrange another mortgage then you will have additional fees to pay which could be quite steep.

peerlessgt

Yes checked with nationwide it is 3k. I think i've worked it out now. It'll cost 3k to get out but i should also factor in the 1k to arrange a 2 yr fixed.So i could stay on the high rate of 6.18 and use the 4k in saving to overpay for a few months.using the mortgage calculator and simply just taking 4k off my mortgage of 171.5k means i'd be paying £1097, but going on the 3.18% deal would be only £830 per month. The balance left over after 2 yrs would favour staying put on 6.18 but i'd be paying off my mortgage more slowly than at 3.18 and theres only £700 between them, by the end of the 3yr when my 6.18% deal ends i'd have a mortgage of £158,227, the 3.18% would have finish the previous yr with £162,221 outstanding, and i've worked out that a deal of anything below 3.75% for the 3rd would leave me with a lower balance, i'd be better off with the 3.18% offer- plus my monthly mortgage for the period (next two years at least) would be nearly £270 per month less. So pay to get out I think!

dimbo61

Please think long term !
You are about to take on a very big mortgage £171K +++
So consider a 5 year term at least
There are 5 year deals at 3.99% YBS and also offset deals ( if you have savings)
Your current mortgage is less than £171K ? hence the £3K exit fee but if you are going to have two parts to the mortgage you may well be better off biting the bullet and taking out a new mortgage else where.
This is a big decision maybe a good idea to get a "whole of market mortgage broker" to help you
Good luck

peerlessgt

I'm putting the mortgage and further advance together and getting a deal with Abbey on a 2 year fixed, hoping to overpay a fair bit. Was thinking about a 10 yr fixed with ybs at 4.99% but decided to use the amount i'll gain in lower rates to overpay and hope to get a long term rate in 2 yrs time. I think i'll be lucky if rates haven't started to move somewhat, would prefer one year tracker (without an arrangement fee!) and then fix longer term but we'll see what the future holds!

Thrugelmir

peerlessgt wrote: »

and then fix longer term but we'll see what the future holds!

But you move on 2% above base when your current fixed rate deal ends. You'll be lucky to ever get this rate again. With a mortgage you need to look at the long term. As paying product fees every 2/3/5 years chasing the best rates doesn't make financial sense over the term of the mortgage. Better sometimes to just overpay the mortgage.