Nationwide - to leave the fix you must leave us!

timeou

Bit of background

83 k mortgage on an £150k property, mortgage due to finish in 7 years time.

74k on interest only, 9k on repayment. Stuck on a 10yr fix at 5.69% 6 years of that left to run

Endowments , 34k with standard life 5 years left to run currently a shortfall of around 10k. Today's surrender value. 14k

40k with Phoenix in 2 separate 20k policies , both currently a shortfall of around 3k each surrender value as of today 11k each.

So, Looking at the 5yr fix with nationwide at 3.99% I thought okay I'll surrender the endowments. So I'll have a lump sum of 36k to knock off the 83k and convert the remaining 47k over to repayment over the 7 years which works out roughly the same as my monthly outgoings now Inc endowments.

Nationwide however are saying that I can't come off the 5.69% fix early even if I pay an Erc!!

I will have to take my business elsewhere!

Does anyone think that it's worth doing this? Not sure if the hassle of remortgaging elsewhere is worth it, I'm wondering with the final bonuses on the endowments will I be any better off I the long run if I sit it out and see what happens?

TrickyDicky101

I wouldn't expect the Phoenix maturity values to significantly improve since they are a closed Life fund and hence their focus will be the maintenance of existing value rather than taking any form of risks to improve returns (via investing more heavily in equities for instance). Unless there is a dramatic improvement in the stock market, it is unlikely to have a material impact to the Phoenix with profit funds.

timeou

Thanks, yes, I think that surrendering the endowments, paying off 35k and converting the 48 to repayment seems the sensible way forward to ensure the mortgage is fully paid off after the 7 years

Looking to move to The Yorkshire Bank - they have a 5 yr fix at 3.79%

Any idea if they are a good company? Would it be easy to get a mortgage with them?

We have a combined income of £46k pa and no CCJ's, or adverse credit apart from each having a small overdraft that we use each month.

Thanks

kingstreet

timeou wrote: »

Nationwide however are saying that I can't come off the 5.69% fix early even if I pay an Erc

That's correct. They won't assist you in breaking a fix with them - even if you pay the penalty.

timeou

kingstreet wrote: »

That's correct. They won't assist you in breaking a fix with them - even if you pay the penalty.

Thanks - I must admit I was surprised - I thought that the ERC was their 'compensation' for you breaking the fix and then you would be released to move onto another deal.

Its not like they haven't done well out of us for the past 4 years fixed on 5.69%....

It seems strange as they'll lose our business now.

timeou

Also, can someone tell me how the financial transaction happens? I guess I would have to make sure the 35k was sitting in my account the day of the new mortgage drawdown, we send that to the nationwide that day along with the 48k from the new mortgage company?

Who would oversee all of this? The solicitor of the new mortgage company?

Thrugelmir

timeou wrote: »

It seems strange as they'll lose our business now.

Do you drop onto the BMR of 2% above base when the fixed term ends?

That maybe the reason NW won't play ball at the moment.

Don't throw away a good long term rate if its the case.

timeou

Thrugelmir wrote: »

Do you drop onto the BMR of 2% above base when the fixed term ends?

That maybe the reason NW won't play ball at the moment.

Don't throw away a good long term rate if its the case.

The fix has another 6 years to run. Is the 5.69% that I'm on really that good?

There is a 5 year fix at 3.79% with Yorkshire bank and my mortgage will only have 2 further years to run after this....plus I'll be getting the chance to deal with the potential shortfall of the endowments

getmore4less

What's the ERC.

Remember you can overpay some with no ERC
calculate the ERC outside the payment it is cheaper for part payments.

I think you need to run through the numbers carefully.

With a short term of 7 years a low cost tracker may be a better option than another fix.

Maybe even consider an offset and longer term to give a lot of flexability

timeou

Thank you.

Nationwide say that an ERC of 3% is payable for ANY overpayments that we make.

They said that if we paid off 35K there would be an ERC of £1500 plus we still couldnt be released from the fix - the fix still has until May 2018 to run.

Thanks for the heads up on the tracker - I don't suppose interest rates will rise too much over the next 7 years (but saying that I thought I was doing the right thing fixing for 10 years at 5.69%....oh to have a crystal ball) x

timeou

Sorry to bump this but I still can't decide if this is the sensible thing to do.

Can anyone suggest the best thing - would seeing an IFA help to work it all out?

Thanks