5 year deal up in June - What to do now?

rosscouk

Hi all,

I am currently with nationwide and I am coming to the end of a five year fixed rate mortgage at 5.08% in June. Not ideal when interest rates have been so low. It is/was my first mortgage on my first house.

Anyway, I am not sure what to do now. If I do nothing my mortgage reverts to a Nationwide variable rate (no product fee or early repayment charge apparantly, + I can overpay).

So, in peoples opinions is it worth going onto the variable rate, taking the chance that interest rates won't rise. Or should I fix again? (My loan to value is 76%, Left on mortgage 126500/value 165000)

Any help greatly appreciated.
Thanks
Rossco

rosscouk

Just checked what deals are on offer if I stay with nationwide

1) 2 yrs fixed, 4.49%, £802 pm, £999 product fee
2) 3 yrs fixed, 4.79%, £822 pm, £999 product fee
3) 2 yrs fixed, 4.89%, £829 pm, £0 product fee
4) 3 yrs fixed, 5.09%, £843 pm, £0 product fee
5) 5 yrs fixed, 5.39%, £864 pm, £999 product fee
6) 5 yrs fixed, 5.59%, £879 pm, £0 product fee

or the varible rate is £668 pm

Options 4 and 6 don't look bad.

opinions4u

Stay on the 2.5% and overpay relentlessly as if your payment was the same as a 5 year fix.

kingboth12

You need to check your deal but i suspect you will be reverting to the BMR also (and not the current SVR). This is capped to be 2% above the base rate. As such you will need to see a large rise to get to what your fixed rate currently is.

I'd suggest stay on BMR and and overpay/save the money you would have been paying anyway on your current rate to get to 60 % LTV and then reasses the situation then - carry on or fix again?

kb

Procrastinator333

I think it depends on how much capacity you have if rates were to rise. You can obviously afford 5.59% rates. If the BOE rose to 5%, making a variable more like 7,8,9% could you stil pay it?

Imo rates are going to stay low for quite a while. On that basis I would prefer the tracker - But only if you could still pay the mortgage if rates rose sharply (though I think this unlikely - your home is not for gambling with imo). If 5.59% is the limit of your finances, then I think take that. 1 year on 2.5% compared to 5.5% and you have repaid another £3.6k of capital off your mortgage. Kepe that up for 3 years and you have got rid of almost 10% of the capital on your mortgage. But I would only do this if you can take that small risk that you may end up paying more.

rosscouk

Thanks for the replies, to answer the question, if I did nothing I would revert to Base Mortgage Rate according to nationwide, currently at 2.5%.

Whatever mortgage deal I take I would be trying to overpay to the limit of £500 each month (currently the limit with nationwide). My ability to pay £850 + £500 overpayment may be more difficult at some point as my wife is half way through maternity and her money drops significantly soon.

Still in a quandry. I could go with the variable rate but might get hit when rates rise. How much do they need to rise to take my payments over £800 when using variable rate?

TrickyDicky101

You can answer that by looking at the table of rates you quote - the BoE base rate would need to move to 2.5% (from its current 0.5%) to take your payments over £800pm. Incidentally, if you choose the BMR and overpay like crazy you will get your LTV below 70% in a little over a year (vagaries of the housing market & valuations notwithstanding) in which case you will have access to 4.59% 5 yr fixed (no fee) deals with Nationwide (admittedly their available deals will change over time, but you will be under that magic 70% LTV very quickly).

Marvel1

If I'm correct, you may go on their BMR rate which is currently 2.5%.

I'm on this one after my tracker ended in 2009.

I have been overpaying up to £400, even when the rates started to drop when I was on the tracker.

Thrugelmir

rosscouk wrote: »

Still in a quandry. I could go with the variable rate but might get hit when rates rise. How much do they need to rise to take my payments over £800 when using variable rate?

Would need to be 4.49%.

Though every month you overpay and interest rates beneath this rate the amount will reduce.

rosscouk

Thanks again for the replies, food for thought.

I wonder whether it is worth going onto the BMR for a year, try and overpay the maximum amount and try and get below the 70% loan to value on the house. Then if interest is rising by this time next year I might be able to get similar deals to now for under 70% LTV next year as I am being offered for over 70% this year. Might be a plan.

Thrugelmir

With BOE base so low, which directly affects your own mortgage interest rate. I'd focus on reducing what you owe rather than interest rates in general.