Nationwide base rate. Should I go to a fixed rate now?

JackKipling

Hi all,
The eternal question I seem to ask myself. I have been on the 2.5% Nationwide base rate for around 18 months. I am starting to feel that perhaps interest rates will go up and wondered if I should fix now.
I have just called Nationwide and the best deal they can offer is 3.79% with a £995 fee or 4.19% without a fee. I feel like it will be a while till the rates would go up to 4% but is it worth having the security now before all the low rates start to disappear?
Grateful for any advice and sorry if this has been asked before. I did a search on the forum but could see nothing on here.
Regards,
JKx

marmitepotato

I am the same as you, I am on Nationwides base rate. I am staying on the base rate with no intention to fix and pay £1000 for the privilidge. I would rather use the £1000 to pay off my mortgage rather than increase it. This is just my opinion tho, I am sure there will be more knowledgable people that can help you.

getmore4less

If you switch you lose that base+2% tracker rate, the new follow on rates are much higher.


So you might save a bit in the medium term but will lose out later.

opinions4u

My view is that you should stay on the rate you're on now, but overpay as if the rate was 5%. Then you will have a lower debt to worry about when rates do eventually start rising.

If you can fix for 5 years or longer at a rate of 4% or less then consider ignoring my suggestion. Co-op, HSBC, First Direct may still have something around that rate (make sure deals are portable though).

Burridge60

I am with opionions4u on this one.

If you really do crave a known payment you should have been doing what he suggests already. When your previous deal came to an end you could have carried on paying at the same amount as the old rate required. You don't need a fixed rate product from a lender for you to "fix" your own monthly payment at a higher rate and you don't then have to pay a fee of £995 to do so. You do however run the risk of the rate exceeding the level you set as your own "fixed" rate.

The 2% above BoE rate you now have can be moved to a new property with you in the future too, but if you take a "new" product the revert to rate is a variable rate without a BoE link.

JackKipling

Thanks so much for the advice everyone. I didn't know I could take the 2.5 BR with me on a new property. We are hoping to move in a couple of years and this would really help us.
I think I will stick with the base rate. We have been making overpayments for a number of years (extra £300 a month) so really it makes sense that we have made our own fixed rate.
Thanks. I knew you would all have some great advice.x

getmore4less

JackKipling wrote: »

Thanks so much for the advice everyone. I didn't know I could take the 2.5 BR with me on a new property. We are hoping to move in a couple of years and this would really help us.
I think I will stick with the base rate. We have been making overpayments for a number of years (extra £300 a month) so really it makes sense that we have made our own fixed rate.
Thanks. I knew you would all have some great advice.x

Stop overpaying and save up for the move.

Any extra borrowing will be on the current offers at the time and will almost certainly be more than base+2%.

With regular savers and ISAs you should be able to get close to 2.5% return after tax.

JackKipling

getmore4less wrote: »

Stop overpaying and save up for the move.

Any extra borrowing will be on the current offers at the time and will almost certainly be more than base+2%.

With regular savers and ISAs you should be able to get close to 2.5% return after tax.

That is really something to think about to. We have an ISA account that we never pay into and this could be for the new move. So I take it that an extra borrowing on a bigger home would be deemed as separate and therefore on the current rates on offer?
x

Thrugelmir

JackKipling wrote: »

That is really something to think about to. We have an ISA account that we never pay into and this could be for the new move. So I take it that an extra borrowing on a bigger home would be deemed as separate and therefore on the current rates on offer?
x

You'll need to raise a 10% cash deposit on exchange of contracts for the new property.

So there is a balance between paying down your mortgage and saving in the ISA.

Personally I would opt for paying down the mortgage. Until both interest rates normalise and property prices subsequently stabilise. There is enormous uncertainty in the short term currently (i.e. next 5 years).

getmore4less

You'll need to raise a 10% cash deposit on exchange of contracts for the new property.


That is always negotiable, down to nothing is possible.

Thrugelmir

getmore4less wrote: »

You'll need to raise a 10% cash deposit on exchange of contracts for the new property.


That is always negotiable, down to nothing is possible.

I've found 10% to be the norm over the years.