Go onto variable rate or fix? - Nationwide

rothchick

Just some advice really.

I owe around £47,000 and have 15 years left on my mortgage. I'm currently on 5.17 fixed rate which finishes at the end of November and I will then revert to the BMR at 2.5%

My option is

BMR- 2.5%

Fixed- 3.04% - 2 year free of charge. Will get £400 cashback if I switch online

Fixed- 2.64% - 2 years arr fee £999 . Will get £400 cashback if done online

Fixed- 3.19% - 3 years, free of charge. Will get £400 cashback if done online

Fixed - 2.89 - 3 years arr fee £999. Will get £400 cashback

Fixed - 3.89% - 5 years, free of charge. Will get £400 cashback

Fixed - 3.69% - 5 years, arr fee £999. Will get £400 cashcack if done online

I've always gone for a fixed rate and quite fancy the free 5 year one but a wondering if I'm making a mistake thinking this is a good deal and maybe I should shop around??

Thanks
Rothchick

rothchick

Actually I only owe £43,500- woo hoo! just checked my statement. My LTV is about 48%

dimbo61

option number 8 why not drop onto the BMR of 2.5% and keep your mortgage payment static so that you are paying the same amount each month as you are now!
that way you overpay every month and reduce your mortgage debt!
If you need security then yes the 5 year fix with no fee is a good deal but we know nothing about you and your family,job,income,plans retirement plans etc
Can you afford to overpay and clear the mortgage asap

rothchick

thanks for replying

My situation is secure at 'moment' My husband and I both work part time and take care of our daughter between us (no childcare cost) We are hoping to increase our hours a bit in the next 6 months as our daughter is now in full time education. We have no one to help us with chilcare so can't work full time. We're not having any more children.

We get tax credits to top up our wages but we put away the child benefit for our daughter and have done since she was born.

We don't have any other debt apart from the mortgage.

We can afford to keep the payments the same. I want to clear the mortgage as quickly as I can. I'm 31, husband is 34.

Both husband and I pay into a private pension. I work for a bank, husband is a civil servant. Decent pensions but as we work part time, we're not putting enough away, can't be helped at the moment. I top mine up with AVC as I get a benefit with my wages (using it for AVC's means no tax)

I always fixed for security, especially when I went on maternity leave 5 years ago, but now I guess my situation is a bit different.

Joe_Bloggs

Do not pay the fees they are poor value at the 43000 level. If you move off BMR then you will eventually go back onto onto SMR (3.99% now) which does not track the Base Rate.

I am with dimbo61 with my personal strategy.
J_B.

dimbo61

By keeping your payment static you are overpaying each month and building up an overpayment pot ( which can be used if ever you need a " mortgage payment holiday " )
As you have no other debt make sure you have a good emergency fund ! at least 3/6 months of income then OP whatever you can afford each month
Fixed rates are very low at the moment so its your call what you think will happen long term with mortgage rates

rothchick

We have enough in our own savings to live on for at least 6 months if we both lost our jobs (which is unlikely) plus if we had to there is our daughter's savings (but only for extreme emergencies!)
I like the the idea of overpaying and reducing our debt as quickly as we can as then the interest rate rises won't affect us too much. Lots to think about, thanks for your input

Joe_Bloggs

Once you have an overpayment reserve then there are more flexible options for borrowing the money back on the older mortgages.
I would never entertain using the words "mortgage payment holiday" in any sentence to a building society.
J_B.

rothchick

I'm allowed a 12 month payment holiday on my mortgage as I've been with Nationwide for 8 years and they only recently changed their ph rules..

I wouldn't want to use this unless I was desperate.

I believe I can underpay if I have a reserve built up on my mortgage(hopefully I would never have to use this)

dimbo61

Like you have already stated by overpaying you build up an overpayment pot and reduce the mortgage debt quicker so that WHEN rates do go up you wont notice so much as you owe less and are already paying the mortgage as if it were 5.17%
Good Luck

mysk_girl

Another vote for staying on BMR and overpaying. If you take a new deal you will lose the ability to 'borrow back' overpayments as Nationwide do not offer this facility on new mortgages.