I was about to switch to a fixed rate but see I'm on a "BMR" of 2.5% - is that good?

Annielou

I would be v grateful for some advice as I'm really confused now! I was just about to play safe and switch to a 5 yr fixed rate mortgage when I've looked at my current mortgage rate with Nationwide only to find its 2.5% and called a "BMR" and capped at 2% above base. I'm suddenly thinking that I've accidentally been really lucky and that's a good product to have and that I shouldn't give it up, even if rates are apparently about to rise. Am I right or am I missing something really fundamental here that I should be considering?

CloudCuckooLand

"Make hay while the sun shines"

But keep a weather eye out for rate increases.

Annielou

Sorry to sound a bit dim, but I thought rates WERE about to rise? So shouldn't I being doing something now then to change to a fixed? It just seems so criminal to change from a 2.5% to a 4.something% - I clearly don't get this do I !

GuidoT

It is difficult to predict where rates are going, but they are unlikely to change by more than 1% this year.

Stay where you are for now and keep an eye on rates.

You do understand it, you see its criminal to move at the moment.

If you have a mortgage that you took out pre credit crunch (Nov 2008) you can sometimes find yourself in a surprisingly fortunate situation. Deals that expired and went on SVRs and BMRs used to be our enemies, but now they are now our friends.

Burridge60

Annielou wrote: »

Sorry to sound a bit dim, but I thought rates WERE about to rise? So shouldn't I being doing something now then to change to a fixed? It just seems so criminal to change from a 2.5% to a 4.something% - I clearly don't get this do I !

Yes we are rejoicing because you have a very low mortgage rate which if you take a fix you wont ever get again.

Why not just assume rates are going to go up to say 6% (or more if you like) work out with a mortgage calculator what your mortgage might cost you at this level and become a mortgage free wannabe and pay your mortgage at that amount now.

You will prove to yourself whether you can or cannot afford the mortgage should rates rise so high. You will also be paying off some capital in the meantime and budgeting for the day they do go up.

It is your mortgage and your budget that it has got to fit.

Savings purists might argue that you should consider other places where your money could achieve more than 2.5% per annum tax free but there wont be many that are risk free.

Might also be a good idea to check Nationwide will let you have the overpayment's back if you need them in the future and get a name and confirmation in writing if possible.

BTW revert variable rate for new fixed rates with Nationwide is 3.99% currently and not linked to BoE I wonder why?

Annielou

Thank you all for your helpful replies. It is good to know that you can accidentally stumble across something good and as it doesn't usually happen to me financially your replies have reassured me that i'm not missing something fundamental

herbiesjp

If you can pay a mortgage based on the higher 4%+ figures, then keep the rate you have, and overpay by the amount needed for the 4% mortgage whilst rates are low.

This way you reduce your mortgage balance more quickly, and when rate rises do occur, it will be based on a lower mortgage amount.