Costs less, this or that?

matty_hunt

Hi. Any advice on the following would be greatfully received.

My mortgage with nationwide comes to the end of its fixed term in March. Naturally, nationwide have offered me a new package but my IFA has suggested another. Which offers the best value in real terms?

Current mortgage of £77000. I wish to make a lump sum payment to reduce total to £59000 and term over 13 years.

Nationwide offered me 5year fixed @ 5.28% plus £399 reservation fee.

C&G offer 5 year fixed @ 5.35% fee free.

However, Nationwide will charge me £90 exit fee to move to C&G and they inturn will charge £255 when I leave them (assume to leave after 5y tie in)

My maths is not so hot and Im not sure if i am over simplifying the way Im working things out. Hence asking for advice. So, over 5 years which is the best option?
Also, anything out there thats better in your option?

many thanks. Matt

Ian_W

On £59K you'll pay:
NW @ 5.28% £3115.20 [interest over 5yrs] + £399 = £3514.20
C&G @ 5.35% £3156.50 + £90 to leave NW = £3246.50

The difference is £267.70 or the equivalent of £4.46 pm. I don't think you can factor the leaving C&G cost into it ATM, other than to say if you do leave them in the future it's a £165 more than leaving NW. However, are you likely to leave them if you can't get a better deal elsewhere inc the leaving cost?

matty_hunt

Ian_W wrote:

On £59K you'll pay:
NW @ 5.28% £3115.20 [interest over 5yrs] + £399 = £3514.20
C&G @ 5.35% £3156.50 + £90 to leave NW = £3246.50

The difference is £267.70 or the equivalent of £4.46 pm. I don't think you can factor the leaving C&G cost into it ATM, other than to say if you do leave them in the future it's a £165 more than leaving NW. However, are you likely to leave them if you can't get a better deal elsewhere inc the leaving cost?

So, even if i did add £225 to C&G I would still save £42.70 with them.

The reason I was including C&Gs £225 exit fee is because the lady at NW told me the exit fee is not applicable if there is less than 10 years remaining, which is the case should I fixed for 5 years. Whilst I can find no liturature online to that effect, neither can I for C&G. The other thing I have gathered from this forum is that exit fees are not fixed. While £225 now, in 5years C&G could increase this to any figure they like. So I am including £225 in as a minimum.

To conclude, is paying an extra £42.70 to nationwide over 5 years worth guarenteeing the exit costs (assuming its free with NW after 10 years) plus the reduced hassel of paperwork and bank account etc that C&G would need or should I be looking to save the £42.70 and potentially £225 (as I may not leave in 5ys)? I have never change provider so dont know what hassel is in store if i go to C&G.
what would you do?

dwsjarcmcd

Personally I wouldn't bother, particularly as you haven't mentioned any legal fees, valuations etc. If any of these apply, then staying where you are is a no brainer

Ian_W

I was assuming that fee free meant no legals or valuation which isn't that unusual with remortgages - though of course not always the case.

There isn't that much hassle to changing lenders - certainly not enough to put you off if there is a decent saving to be made. However, the point about it being free to leave NW in 5yrs probably should sway you towards staying and looking again then, IMO. The leaving fees aren't fixed but in view of the bank charges debate you're more likely to get a lender to lower them if you protest than see them going dramatically - again only IMHO.

Rick62

On £59K you'll pay:
NW @ 5.28% £3115.20 [interest over 5yrs] + £399 = £3514.20
C&G @ 5.35% £3156.50 + £90 to leave NW = £3246.50

Thats only the interest for 1 year. Simplifying to a flat £59k (rather than repayment):
5.28% : £3115.20 x 5 + 399 = £15975
5.35% : £3156050 x 5 + 225 = £16007

So your better of staying where you are, and you save all the hassle.

dwsjarcmcd

plus in the (albeit unlikley) event that Nationwide gets taken over, you would lose any shares by moving