When fixed mortgage rate ends...

pollyanna24

I am currently in a 5 year fixed (5.63%) mortgage with Nationwide who allow us to overpay by £500 a month which is what we do.

When the fixed rate is up next April, we will have £20,000 saved up to stick on the mortgage as a lump sum.

When would be the best time to do this?

Obviously not before April as I will get charged an ERC.

Do I wait and put the money on while still with Nationwide after the fixed rate is up?

Or can I go to a new mortgage company and put the £20,000 as soon as I join them (as they may have limits on overpaying as well)?

I think that the £20,000 will put us in a new LtV ratio, so really need the new company to take it into account.

Hope the above makes sense and someone who has been in the same situation can help.

getmore4less

Look at your follow on rate thats the starting point.

Note that older nationwide mortgages have much better terms than most new mortgages by them and most other lenders.

Sooner you pay it off the less interest you pay.

If you change lender you just borrow less next time round.

pollyanna24

getmore4less wrote: »

Look at your follow on rate thats the starting point. - where do I find this? Is it on mortgage statements?

Note that older nationwide mortgages have much better terms than most new mortgages by them and most other lenders. - Really? Do they? I though 5.63% was quite high considering what I see on the net about fixed rates, e.g some of 3.49%. EDITED as I noted you said terms and not rates. Why are their terms so good as opposed to others?

Sooner you pay it off the less interest you pay. - that's my intention, hence the £500 every month and £20,000 lump sum.

If you change lender you just borrow less next time round. - But when do I put the £20,000 on the mortgage if I change lender? With Nationwide after the fixed rate has ended?

Sorry if I seem a bit dim, just wondered when was the best time to put the lump sum on. I figured that I would change lenders as there do seem to be a few good deals out there at the moment if you have say 60% LTV, which with the £20,000 we should be okay with that.

Will the new lender take it into account that we want to move our mortgage as soon as the fixed rate is up and that we want to borrow say, £20,000 less than what we owe Nationwide because we have it sitting in a bank account or will they just transfer the whole amount outstanding from Nationwide to them and charge (if they apply charges to overpayments) if we decide to put the £20,000 on then?

Lifes_Grand_Plan

Just wait until the fixed rate ends and then pay the lump sum off immediately... then when you remortgage with NW or another lender, they will remortgage you on the lower amount.

pollyanna24

Thank you very much for your answer.

Does remortgaging take long? Again, apologies for dim question.

Only I know mortgage companies hold mortgages if you apply early enough (say three months before your fixed rate is up) and I wouldn't want to miss out on any "great" deals that there might be out there closer to when I need to refix just because I want to put a lump sum down.

pollyanna24

Just to throw another question in the works.

I've been looking at Nationwide's website and it says that once my fixed rate ends, my rate will go back to BMR which is 2.5%.

Now this seems a lot cheaper than any of the fixed out there, so would I be better off doing this for a while (if interest rates don't go up dramatically in the next year) cos then I can overpay what I like and still save money by having a lower interest rate?