Current fixed ending in March, would like another fixed, any advice?

dizzydusty

Hi,

My mortgages have always been arranged via an estate agent when buying a new house, so I have never used an independent mortgage broker before.

My current fixed with Nationwide is ending in March, I am keen to have another fixed but cant decide whether to keep my monthly cost the same and reduce the term or go for a reduced payment. Current fixed is 5.48%. I have an overpayment on the mortgage of £10K. I would be looking to borrow just over 50% of the property value.

Using Nationwides mortgage calculator, I can reduce the term to 17 yrs (from 21) if I keep my payment the same, or reduce the payment by about £70 a month if I keep the term the same. Nationwide are also offering me £400 cash back to arrange on line and take a new mortgage with them.

What I would like is to reduce the term and the cost, preferrably for free, but don't have the first clue where to start. Current mortgage is a repayment and was only taken out 5 yrs ago (if that makes any difference).

Im a single mum, in long term FT employment, and two kids (ones 22 the other 16). Living in Scotland (I dont know if the law is the same for both England and Scotland when it comes to mortgages.)

Any advice would be appreciated.

Thanks

natman

We have just gone for a Britannia 5 year fix at 3.59% which seems a pretty cool deal as it has no set up cost .

Heres the link -

http://www.britannia.co.uk/_site/channels/mortgage/products/5yr-fixed.html

It will always be a debate about reducing term / increasing payments etc.
I am a big advocate for reducing mortgage, but we are due our 1st Baby, therefore fixing for 5 years was important.
In addition I actually increased our mortgage term and reduced our monthly payments to allow us the best possible chance of being financially comfortable during maternity leave. recession, increasing energy bills etc etc.

So I have actually gone against my normal basic rule, because our circumstances have changed, and I suppose that is what i am saying....

Assess your circumstances. Try and stick to a focused plan and make sure your deal is competitive.
Good luck

getmore4less

Whats the followon rate for the current deal if the 2.5% why bother changing?

Why fix?

With 50% LTV as long as income stacks up you can probably get the best trackers deals around and over pay even more.

kingstreet

Always voluntarily overpay in preference to reducing the term. You never know if something might change, leaving you with unaffordable monthly payments.

As gm4l asks, what's the follow-on rate? If you took your current deal before 30 April 2009, it's 2.5% and if you give that up, you'll never see it again. If it was after that, you're only losing the later, worse rate, currently 3.99%.

dizzydusty

Ok, so now I am showing my ignorace....

What is Base Mortgage Rate?? according to paperwork the BMR is never more than 2% above bank of England base rate.

At the moment I am paying £343 a month at 5.48%. I also don't fully understand the concept of a tracker mortgage, I have always opted for fixed as I know what my payments are.

Thanks

kingstreet

Have a look at this to work out what you're giving up before you start thinking about what you might opt for;-

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

Base mortgage rate, currently 2.5% for pre April 2009 cases, or Standard mortgage rate, currently 3.99% for post April 2009 cases.

Which are you?

dizzydusty

Hi

I am on the Base mortgage rate. I contacted Nationwide who confirmed this as my mortgage is pre 2009. This will lower my payments by approx £70 a month, plus give me the option of unlimited overpayment (should I have spare cash).

I think I will go with this, and keep an eye on any increases to the base rate -

Thanks again!