Nationwide fix ending.

financialbliss

Hi,
Appreciate there’s a fair few queries at present along the lines of should I fix, should I drop onto SRV etc.

I’ve actually made a decision on my own situation! Background is as follows:

• Coming to end of a 5 year fix with Nationwide at 4.79% on March 31st
• Estimate I should owe £30,675 at March 31st
• Property worth around £235,000 so LTV very low at ~14%
• Have an overpayment reserve of £27,000 which I could draw down from Mortgage should I need to
• Nationwide confirmed that I will drop onto their BMR at 2.5% from 1st April
• Remaining mortgage term is 3 years

Have a number of options, eg take another 2 year fix with Nationwide, re-mortgage to another lender or drop onto the Nationwide BMR.

Currently paying £1,000 to the mortgage – requirement of £929.33 and OP of £70.67. From April 2011, monthly payment requirement will be £888.71 providing the BMR is still 2.5%

The tipping point was that if I decided to take another fix with Nationwide, they would draw a line under the existing overpayment reserve which I would no longer have access to, plus I would then revert to their Standard Mortgage Rate after the fix – currently 3.99% with no ceiling.

As I’m already overpaying, the £1k per month payment is equivalent of a mortgage rate of over 10%, plus each 0.25% increase in the base rate increases the monthly mortgage payment by just £3.37.

I’m taking a risk, but I’ve decided to allow the mortgage to drop onto the Nationwide BMR.

I’ve also calculated various BoE base rate scenarios including an increase every second month (probably unlikely) from now until the end of the mortgage, which puts the base rate at 5% in December 2013 and the BMR at 7% at which point the mortgage would end.

Due to the mortgage being small, especially so in the last year the potential ramp up in the BoE rate has very little effect, only increasing the term by one month compared to a 2.5% BMR (unlikely too) for the remaining loan term - a 2.5% rate throughout would cause the mortgage to end in November 2013.

Seems like a no brainer?

Curious more than anything as to the route others would follow if they were in the above situation?

Financial Bliss.

dimbo61

me I would drop onto the BMR and keep your payments the same if not overpay while also building up your cash ISA,s
In 2 years you could be Mortgage Free

Burridge60

Your User name is a clue! :-)