In need of a pair of eyes to confirm my interpretation of my key facts

jasmin10

My 3 year tracker is due to come to an end on 31st Oct this year and began browsing what was out there. Then I had a brain wave regarding information which is mentioned in the key facts sheets you get when you complete a mortgage.

I am reading this as it saying that come my product expiry Nationwide are guarenteeing that their BMR will not be more than 2% above the Bank of England Base Rate - in which case, rather than looking at a new product like I have been which has interest rates of 4 %+, I would actually be better of letting my current product expire and fall back onto the Nationwide Base Mortgage rate as they have stated that it is guaranteed to be no more than 2% above the BOE. Then should the time come in a year or so, then start looking at products.

Here is what is says, do you agree with how I have translated :-

"The tracker rate will apply from completion until 3 Years from the end of the month in which you take the loan, after which our Base Mortgage Rate, which is our standard variable rate will apply for the remainder of the term. Our Base Mortgage Rate is guarenteed to be no more than 2% above the Bank of England base rate".

Any help in confirm what I think is greatly appreciated.

Sam

holly_hobby

Yes you are right ... if you effected your mge product before 30 April 2009 you qualify to go on to BMR - which is currently at 2.50% (i.e boe base & 2%), with the option to make unlimited overpayments.

Refer - http://www.nationwide.co.uk/mortgages/interestrates-types/standard-basemortgagerate.htm

Hope this helps

Holly

jasmin10

wonderful thank you for that. I think I will just leave it then until the BoE goes back up to around 3% .

Sam

jimjames

jasmin10 wrote: »

wonderful thank you for that. I think I will just leave it then until the BoE goes back up to around 3% .

Sam

Although it is only guaranteed to be no more than 2% above and may actually end up being less than 2% above BR when the base rate finally rises so it may be beneficial to stay on it very long term!

Nationwide had some cracking deals though I'm sure they didnt realise quite how good when they offered them! They were offering a tracker at 0.29% above base, they introduced at floor at 2% but 2.29% still isn't bad. Wish we'd got on of the others than didn't have that floor but thats hindsight!

jasmin10

Thanks for your reply Jim james, how would it end up being less that 2%, surely they would get everything they could. Hadnt thought of the last bit before so thank you for pointing that out -"staying on it for a long term"

jimjames

All they are saying is that they guarantee the Base Mortgage rate (BMR) won't be more than 2% above BoE base rate which protects you. You might think that they want to screw every last penny but at some point in the future when rates return to more normal levels 2% above base rate may be really uncompetitive and they need to reduce it to keep business. Or they might do as they have done in the past and introduce a new mortgage rate and give it a different name like Standard Variable rate or something so that they don't affect existing borrowers.

Either way at the moment you've got a pretty good deal when you move onto that rate as I'm sure they never expected that people would actually want to remain on the BMR once their deals finished!

Thrugelmir

jimjames wrote: »

but at some point in the future when rates return to more normal levels 2% above base rate may be really uncompetitive and they need to reduce it to keep business.

Era of low mortgage interest rates has passed.

OP, if your on 2% above base rate. Then stick with it. Don't switch to another mortgage for the apparent benefit for a few years. As you are unlikely ever to return to this rate.

Either pay additional amounts off your mortgage or save. Depending upon which gives the better return.