* Keyfacts questions for Nationwide fixed rate of 5.3% *

CharleneUK

Hi all.

I'm getting a mortgage in principle and have searched around and am getting different quotes, I've looked seriously into nationwide for the following:

£145,000 mortgage over 30 years - Monthly repayments of £811 (we're also opting to pay the reservation fee of £499 in the mortgage rather than upfront)

It's 5.3 fixed rate for 10 years. They estimated we could get £168,000 maximum, so it looks all o.k as we need less.

There are a few things I don't understand and would appreciate any wisdom. I also appreciate these may be classed as 'stupid' questions, but if you don't ask! ........

Valuation fee, which is payable before the valuation is carried out. I thought you could get this done independently?

You must get buildings insurance before the loan starts, is this normal?

Redemption charge, are they saying that if you, for instance, move mortgages you pay £90, like when people switch mortgages?

Early repayment charges for the first 10 years are basically £4,365, so say for instance, I stick with my 10 year fixed rate, but after that I want to switch, do I have to pay this fee, or is it only payable if I move BEFORE the 10 years is up?

Lastly, the key facts state that you'd pay an 'Interest charged in the month of advance, payable with your first full monthly payment' £674.08 But this seems more than the interest, because surely, out of £811.58 (The monthly payments) £674.08 aren't interest rates? and in clear terms this means, I'd have to pay the full, plus this £674 at the beginning of the mortgage?

Thank you if you've got this far. Does this sound like a good mortgage? They can offer fixed of 5.3 for 2, 5 and 10 years.

homer_j_3

you can add reservation fee until completion and pay following completion. That way it stays in your pocket for longer and if it doesn't happen for any reason then you dont have to waste time geting this back. You have to make sure you pay it upon completion because otherwise interest starts to accrue.

NW will want a basic valuation by a surveyor from their panel so you have to pay this. If you want anything more in depth then you can go independent or pay through NW.

Buildings insurance should be in place for exchange as you become legally committed to the property at this stage.

If your payment date is the 1st and you complete on say the 10th then you will have a larger payment omn your first payment as it takes the initial interest from the 10th of the month to the end of it and then you pay your month in advance.

NW are a good mortgage provider and they will always be there or there abouts in most situations where no bad credit etc is involved but whether it is right for you? Is a good mortgage for you? I cannot answer as I do not know your circumstances fully.

kingkano

Yes 674.08 would likely be the interest in the early years of a mortgage. As the years go on the amount your paying off your capital means your paying less interest and more capital.... thats why you end up paying on average twice the price of the house over the average mortgage term.

The redemption penalty charge will only apply during the fixed term, ie 10yrs in this case. After that there will be a small charge made for closing the account (£200?), but you can change deals otherwise unhindered.

CharleneUK

Thanks a bunch to both of you!! It's much clearer now.

Most people I have mentioned a 10 year fixed rate say it's far too long and I should opt for the 5 year one.

The reason I want to do 10 year is because I have a bad feeling rates are just going to continue rising, and in 5 years time, I may end up paying more.. Hmmm.. still food for thought.

Cheers again.

homer_j_3

what are the early repayment charges on both 5 & 10 year?

The_Bear_6

CharleneUK wrote: »

Valuation fee, which is payable before the valuation is carried out. I thought you could get this done independently?

Yes, if the valuer is on the lenders panel then you can just get a retype for about 100 quid.

You must get buildings insurance before the loan starts, is this normal?

Yes. Lender has to know that if the house burns down its money isnt wasted.

Redemption charge, are they saying that if you, for instance, move mortgages you pay £90, like when people switch mortgages?

Yes, and 90 quid is pretty good.

Early repayment charges for the first 10 years are basically £4,365, so say for instance, I stick with my 10 year fixed rate, but after that I want to switch, do I have to pay this fee, or is it only payable if I move BEFORE the 10 years is up?

Before 10 years you'll have to pay that.

No offence but can I ask why you think interest rates will be higher in 10 years? I know a lot about macroeconomics and I could not even begin to guess where interest rates will be in 10 years time.

edit: 2yr is 1.5%, 5 and 10yr is 3%

homer_j_3

I think if there is no difference and it will make you feel more at ease having 10 years worth of security then brilliant go for the 10 year deal.

As long as you know that the £4365 is payable should you want to move or get out of the mortgage and you can live with this then that is fine.

I would not rely on the portability (ability to transfer your mortgage without ERC) as the answer as this can be risky if your circumstances change or the lenders criteria changes.

I would ask that you really consider your circumstances in terms of where your career, family and aspirations will be heading over the next 3,5 or 10 years.

CharleneUK

Thanks again.

homer_j: The table shows the early repayment will always be £4,365 for the first 120 months. I didn't do a quote for a five year mortgage.

The_Bear: Can I be honest here? I just assume that interest rates will be higher than they are now, but do not have any proof or have not done any research what so ever! It's just an assumption because they have been going up lately.

homer_j: I guess it is about security really, however, in the next 5 years or so, I'm considering working full time, rather than part time, as our youngest will be in full time education by then, and daddy cares for the kids once they are home from school as he works nights, so there will be more income, thus maybe changing the mortgage slightly, but to what, I'm not entirely sure.

Nationwide are calling tomorrow, as the application froze halfway through, so I can ask more questions then! I'm getting very excited now, but it's all very scary at the same time.

I went to the fsa site and Brittania seem to have a good product as well, so will be getting a quote from them, too.

firesidemaid

does the mortgage have an option to overpay eg. up to 10% a year - something to consider in the future, especially if a) your pay goes up or b)you go for a longer fixed term.

have a look at the overpayment calculators on this site at some point.

re: adding the fee to the mortgage - the interest on £499 is approx £4 a month or approx. £500 over 10 years (also begins to show you the effect of overpaying).

CharleneUK

Hi Sazzacat, you are allowed to overpay upto £500 a month before receiving a penalty, which I think is pretty good, although I'll never be able to over pay that much!

I might also reconsider adding the fees to the mortgage! Why give away even more money!?

golly99

Is this rate advertised anywhere? Can't seem to see it on the Nationwide website, currently a Nationwide customer and thinking of going for the 5yr fix at 5.44% with no fee as been with Nationwide for over 3 yrs.

Thanks