New Repayment Mortgage (Advice Req'd)

WSforever

Hi,

My 5-year fixed rate (4.69%) mortgage with Nationwide is about to expire and I'm looking for advice as to what to do next.

I have only ever had a fixed-rate mortgage and I'm presuming that with the imminent rise in interest rates I would be best to take out another long-term fixed rate deal?

I have 17 years left on my 25 year-term mortgage.

Any advice greatly appreciated....

CloudCuckooLand

Start by asking Nationwide what they will offer next. Often follow-on deals can be pretty reasonable, with lower fees than a remortgage to elsewhere.

Burridge60

Your follow on rate should be a very attractive 2.50%. You might like to check your papers.

If you take a new fixed with Nationwide your revert to rate at the end of that fixed rate will be 3.99% variable.

You could ask nationwide to maintain your payment and revert to the 2.50% rate ahead of this going up with BoE rate increases which are not yet known but are largely expected.

Take a new fixed rate with them and pay a product fee to do so. You would need to talk to them about what rates they have available.

or

move to another lender with a better rate or deal (watch the fees) but with the hassle of some legal work in between. You would have to apply for a whole new mortgage if you do this whereas your current mortgage with Nationwide would continue without any actions required by you, unless you want another fixed rate with them.

Meeper

You will revert onto their Base Mortgage Rate at Bank of England Base Rate + 2%, giving you a current pay rate of 2.5%. You will obviously therefore see a significant reduction in your monthly payments if you do nothing and simply move onto this rate.

Whether you do nothing or you get a new long-term fixed deal is entirely your personal preference and will be determined in part by your mortgage size, property value and a few other variables. Generally speaking however, I would tend to let things move onto their BMR and overpay as if nothing had changed and you were still on your 4.69% rate. That way you will be reducing your balance much faster than if you took a new 4-year fixed which at best would only be at around the same rate as you are currently paying.

Personal preference though. If you want the absolute certainty of knowing what your payments would be for the next 5 years, then take the 5-year fixed route. If you are happy to take a chance and capitalise on the current low rate enabling overpayments, then do that. There is no right or wrong answer, only what is right or wrong for YOU as an individual, and only you know that.

EDIT - haha - 2 other responses while I was typing

Burridge60

Meeper wrote: »

EDIT - haha - 2 other responses while I was typing

He he.

Happens to me all the time its the typos that take the time to iron out!

WSforever

OK thanks for your excellent advice thus far.

So if I choose to do nothing and automatically revert to the 2.5% rate, and continue to pay the same mortgage contributions, presumably my overpayments will enable me to reduce the overall term of the remaining mortgage??

But then at some point in the future I can then 'buy' a new 5-year fixed rate deal? (I assume there will be some form of set-up cost?)

If I've understood that correctly thats got to be the way to go I guess unless there are certain pitfalls that I'm not realising.

I was initially thinking - I need to go and get another fixed rate deal and hadn't realised I could/would automatically revert to a base-rate variable.

Please excuse my ignorance!

Meeper

Yes, and yes. Although note that your mortgage payments will reduce and you will need to get in touch with the lender in order to set up a regular overpayment separate to your contractual mortgage payment.

WSforever

Will there be much difference in the set-up / mortgage arrangment fee if I decide to take a new fixed-rate at a later date as opposed to the time when my current deal expires?

Meeper

Who knows what the fees will be at some random point in the future? Can't say, sorry.