Nationwide mortgage query - fix or stay on BMR? expert help needed please.

leeloo1

I'm hoping someone can help me work this out, our fixed rate finished in Oct 2010 and we went onto the 2.5% BMR. Every 3 months I've been reserving a 2 year fixed rate (no charge for doing so). In that time I reserved 3.99%, 3.89% and finally 3.79%... rates are now 3.89% again.

In the past I've always had fixed rate mortgages, so my instinct is to take out the 3.79% when the offer is going to expire in mid-May, which is now a 'good deal' as far as their fixed rate mortgages go (especially compared with the 5.78% our 2nd mortgage is on! Our £500pm OPs go into this mortgage btw).

But, I suspect that I may be better off staying on the BMR for another 3 months and reserving the 3.89% 2 year fixed rate mortgage in mid-May (assuming its still available). My maths skills can't even begin to work out if this is true though or if I'd be better off taking out the 3.79%.

Both mortgages currently offer £300 cashback btw, but that may be a red herring?

If anyone can work out (and hopefully explain) which I'd be better off doing I'd be very grateful. The mortgage is for £97,500 if that makes a difference.

Thrugelmir

Are you making overpayments while on the BMR?

leeloo1

Hi, thanks for wading through my post - probably clear as mud! But no we're not making overpayments on the BMR mortgage, they're all going into the other one, to pay off the higher rate 1st.

2 mortgages:
100,000 - 5.78% - £500 OPs pm
98,750 - 2.5% - 0 OPs pm

Thrugelmir

Personally I would leave the mortgage as it is one part variable and one part fixed. As until such time as interest rates do rise. You are making inroads into the more expensive debt.

leeloo1

Thanks, my worry though is that I'll lose the 3.79% fixed rate I've reserved and remortgage in 6 months at 3.89% and not know if I've lost money or not. I was hoping someone could tell me if financially I'd save more in 3 months by staying on 2.5 then taking out the 3.89, than I'd lost by not taking out the 3.79...

dimbo61

0.1% difference over 3 months compared to a rates of 2.5%
Use "whatsthecost" to work out the cost of your mortgage at 2.5% ( which you already know) and then at 3.79% and 3.89%
I would carry on overpaying the more expensive part of your mortgage and if possible also building up savings in cash ISA,s paying over 3% TAX free.
You dont say how long the 5.78% deal has to run and how worried you are about rate rises but if you do want a fixed deal and wont be moving why not consider a longer term fix of 5 years