Nationwide launches a 10 year fixed rate mortgage

bamboozled_2

This is probably a really stupid question, but what reasons are there, apart from winning the lottery, for wanting to redeem early?

I ask cos my flatmate and I share our mortgage and probably won't want to live together forever (lovely tho he is). If and when we decide to go our separate ways, would one of us just be able to take this mortgage on to the next property we buy?

Edit: ok - there's one reason - if mortgage rates went down....

foot_loose

Daft_Monkey wrote:

On April the 1st, Nationwide will be launching a new 10 year fixed rate mortgage @5.19% (unless it's a joke)
[url] http://www.nationwide.co.uk/mediacentre/PressRelease_this.asp?ID=657[/url]

you just missed out http://www.britannia.co.uk/mortgage/fixed/10_year/index.html

was doing a 10 year fixed at 4.99, but they have stoped doing that now. its gone up to 5.39

mrcow

bamboozled wrote:

This is probably a really stupid question, but what reasons are there, apart from winning the lottery, for wanting to redeem early?

Because if by taking advantage of mortgage flexibility, you can pay any more than the normal monthly repayments, you will potentially save yourself thousands of pounds in interest over the full term.

For example, I've currently got a mortgage whose terms stands at 21 years. With my overpayments, I'll be all paid off in 9 years, saving myself £32k in interest payments (not to mention the 11 years of being tied to a mortgage). The way I see it is why would you not want to redeem early?

Hobo_2

Wanting too & being able to afford too, is the difference a fix for 10yrs might be a good move for someone who`s just borrowed at their limit of affordability & could not stand int rates moving up at all + no windfall on horizon, after all historically rates are still near 40yr low
See here

http://www.bankofengland.co.uk/mfsd/rates/baserate.pdf

Tilliebet

The interesting thing about Nationwide (I don't know about others, sorry) is that additional borrowing counts as a new mortgage but in a good way.

In our case we had a NW mortgage them moved to a bigger place so extended it, giving us 2 mortgages. We recently re-mortgaged to the 5 year fixed but despite the fact we only had to pay one 'reservation fee' the 2 mortgages are regarded as seperate and as such we are allowed to make a £500 overpayment on each one - allowing us to overpay £1,000 a month with no penalties. Seems like the best of both worlds.

I wonder if it is possible when first setting up the mortgage at ask for it to be spilt in half with slightly different redemption dates in order to get the same situation?

MarkyMarkD

That's an interesting point, Tilliebet.

wotnoshoeseh

Yes, I managed to do the same and now have two mortgages tied in for 5 years with NWBS at 4.95% fixed for 5 years. In reality I can overpay to the tune of £1000 per month. If only I had the spare cash to do so.

Currently my mini cash ISA is paying only 4.85%, so I'm wondering whether I would be better off moving money from my ISA into the mortgage account, or re-directing the money destined for my ISA into the mortgage.

Anybody got any ideas?

marnstars

Cheshire Building Society https://www.cheshirebs.co.uk have a 5.28% fixed for 15, 20 or 25 years. It has penalties BUT has a number of "windows of opportunity" to pay off in full (they vary for each at around 6 years, 8, 10, 12 and 14) - considering this one myself.

I have been switching far too often and the penalty for me realistically has been within the fees.

Any thoughts between this one and the nationwide one (incidently I have my mortgage with them also)?

MarkyMarkD

The "window of opportunity" things are OK in theory but of course not very useful in practice - they are OK if you are remortgaging, but not if you are moving house as you would find it hard to guarantee completing your sale within the window period IMHO.

So, you could end up having to remortgage and then take a new mortgage - two lots of hassle within a short period - to avoid the Cheshire's penalty.

alex69

Agreed but in the event of a windful (for example in the form of heritage) they represent a very valuable addition.