Advice on Fixing my Mortgage or Going Onto a Variable Rate

2ton

Hello,


I currently owe roughly £113'000 on my mortgage with about 19 years left. My 5 year fixed rate deal is due to end in May and we currently pay about £740pm. We are currently fixed at 4.69%.


Our mortgage is with Nationwide and they are currently offering us the following deals:
1. 2 years fixed at 3.89% (no fees and £300 cash back)
2. 3 years fixed at 4.19% (no fees and £300 cash back)
3. 5 years fixed at 4.69% (no fees and £300 cash back)


alternatively I can lapse onto the variable rate which is 2.5% (must be base rate + 2%). This will bring our monthly costs down by about £130pm! but obviously this will only go up and sooner rather than later.


I would love to get some second opinions on what to go for. We like the idea of being on fixed rate but our finances are not so tight that we must be on fixed rate. On the other hand saving £130pm is very attractive even if that will only be the case for the next 6 months...

Thanks

Stephen

getmore4less

Pretend you took the 5 years fix and pay/save that amount.


You will reduce your net debt and build up a buffer should rates go well over the rate of the fix.

bully1234

I've been on Nationwide Variable for 2 years - saved £1700 in ISA and used rest on the house. got 17 yrs left and £69k to pay. We are saving £120 a month at the moment. Just going to sit on the variable rate and see what happens.:j

Burridge60

Pay what you pay now and stay on BMR. Overpay that mortgage!

How many people here have a Nationwide mortgage. Great advice that someone gave you whatever happens!

originator

My Nationwide 5 year fix finishes end of August 2012. 5.78% didn't seem so bad back in 2007 lol. Tiny mortgage tho so I won't be fixing again unless the rates go totally haywire,wonder what the BMR will be by the time I go onto it?

SilverSix

Just took out my first mortgage today. Tracker @ 2.25% above base rate for 5 years. Can switch to fixed at any time with no charges etc. Unlimited overpayment too. With Nationwide actually but this might just be a FTB special and also that my mortgage is only 14% LTV.

Depends what you value really? For me a 1% rise in base rate would cost me £21 extra per month though this is on a very small mortgage. Do you want security & peace of mind? Or more cash in your pocket?

2ton

Thanks for the advice. I like the idea of dropping onto the variable rate but saving / over paying the difference. That means the money will be put to use and not just absorbed when inevitably our spending increases to match the spare capital.

I think we're going to go with the saving's option (although we also like the idea of over paying). we plan to move in the next 3 - 5 years so building up a nice pot will help with this process (e.g. possible renovations, extensions, fees etc.) and as pointed out it will provide a nice buffer if interest rates start doing something silly.

Thanks again.

delmar39

originator wrote: »

My Nationwide 5 year fix finishes end of August 2012. 5.78% didn't seem so bad back in 2007 lol. Tiny mortgage tho so I won't be fixing again unless the rates go totally haywire,wonder what the BMR will be by the time I go onto it?

You won't go onto the BMR with this product, you'll go to the standard variable rate, which is currently 2.5%. The BMR is currently 3.99%.

delmar39

OP, my 4.69% deal with Nationwide also comes to an end in May - I posted something similar on Monday. I'm sticking with the SVR currently 2.5% - any new products would revert to the expensive BMR, so I'm reluctant to give up the SVR at the moment. I accept that this deal seemed more attractive when interest rates were stuck at 0.5%, but it's still a cheap tracker in my view. I'm going to continue paying my mortgage as if the rate was at 4.69%, so will be overpaying with the savings. I've worked out that interest rates will have to top 5% for me to lose out.

Thrugelmir

2ton wrote: »

I think we're going to go with the saving's option (although we also like the idea of over paying). we plan to move in the next 3 - 5 years so building up a nice pot will help with this process (e.g. possible renovations, extensions, fees etc.) and as pointed out it will provide a nice buffer if interest rates start doing something silly.

Mortgage interest is calculated monthly. So overpaying has an immediate effect on reducing the capital debt owed. The actual return is higher than 2.5%.

Personally I would maintain the repayments at the current £740pm. With low interest rates so low it is a once in a lifetime opportunity to clear debt.

originator

delmar39 wrote: »

You won't go onto the BMR with this product, you'll go to the standard variable rate, which is currently 2.5%. The BMR is currently 3.99%.

oops just realised this by reading other posts also,:) thanks delmar