Help me understand end of deal mortgage options

advice_please_2

Currently:
Value of House £230-240k
2007 set a 5 year fix at 5.44% on £100k, £613/month

Product ends April:
Reverts to BMR 2.5%, £474/month

Question 1. If I stay on BMR (£613-474 = £139 saving)
Is the same interest and capital paid as before at £474/month?
Could potentially save £139 in an ISA for overpayment or help cashflow

Looked at current deals available with current lender:
1. 5 year fixed 3.89% £539/month, £999 fee
2. 5 year fixed 4.09% £549.36, £0 fee
These then move on to SMR 3.99%

Question 2. If I was wanting to save money, would it be best to stick with the BMR and if interest rates do move go on one of the above?

Question 2a. If the interests rate do move, are they overnight all of a sudden or would there be a warning so I can swap to the 5 year fix?

kingstreet

1. The amount of interest you pay drops as the rate drops. You will still however pay the capital back within the remaining term. Quicker, if you pay some of that saving you mention as a voluntary overpayment each month, or save it into an ISA at a higher rate for lump sum overpayments later.

2. Possibly. It depends what's important to you. If you feel you want the certainty of knowing what you'll be paying...

3. Rates are likely to increase gradually, however, the fixed rates available today will probably be worse when you want one in a market where rates are rising.

I'd say giving up the 2.5% (base + 0.5%) deal would be a mistake. Go onto this, make overpayments or save while you are saving money. If rates start to rise, look at your options then, including other lenders. Nationwide is not the only lender open to you and the fixed rates you mention aren't brilliant, neither is the change to the follow-on rate you'll suffer. You could do better by moving to another lender, if you want a fix now.

advice_please_2

Thanks, I'll probably stick with the BMR and either overpay or save the difference for overpayment or emergency uses, and then look to fix if the rates look to rise.

Question is when rates do rise, are they over night, get given notice etc. i.e. is it a bit like Utlity where MSE had warned the public the energy companies were going to do price rises so fix now etc.

ACG

The variable rate is usually linked to the bank of england base rate, each month the Bank of england take a vote on what to do with interest rates.
They then say interest rates will rise/reduce/remain the same banks will then usually follow suit within 30 days or so. However, dont be surprised if as soon as that is announced any rates available get pulled and exhcnaged for higher rates. Also the banks tend to have an idea on what the BoE will be doing before we do so chances are they will be one step ahead of the BoE anyway.

advice_please_2

thanks

As a newbie to this I guess a good way to ensure is follow up on Bank of England base rates etc.
Any other sources would you recommend to follow to track interest rates which will link to these fixed deals.

True Nationwide arent the only ones etc. So will do some homework there.

getmore4less

Fixed rates a re changing all the time as they try to seccond guess the way thisngs will go and the vailability of funds.

base+2% is a good variable rate, fixing only protects you short term and any followon will be higher than the current deal so ytou will be worse off if you change.

If you change you will lose money to start with, then you might make some savings, but will lose money later.

the gamble is will you safe enough from the might save to cover the will losses!

Stay on the low rate now and mitigate by overpaying/saving the difference.

advice_please_2

Thanks again.

Thinking will go on the BMR to save some money now.

But with talks of increasing mortgage rates. I want to make sure I don't miss out on a good fixed rate if they do increase.

any thoughts on Nationwide fix rates moving?