Mortgage switch worthwhile at end of fixed deal?

Mojo71

Hi,

My current 2-year fixed rate deal with Halifax will end in July, and I am considering moving to Nationwide, as their rates seem slightly lower. However, I'd like some opinions on whether the sums involved make it worthwhile.

I haven't yet looked into costs and charges involved, but to summarise:

- My existing mortgage at end of current fixed period will be around 36k.
- Looking to pay off lump sum to bring it down to 25k.
- Remaining term 12 years.

So, I'm looking at Nationwide's 2-year fixed rate at 5.84%, no fee, which has minimum borrowing requirement of 25k (for a no fee deal)

But is it worth switching provider for a rate which works out almost 1% less than the Halifax rate? Halifax's remortgage rate for this amount for existing borrowers is currently 6.69%, with a small reservation fee of £49, and I'm not sure what will happen if I either revert to their standard rate, or whether I'd be offered something else to retain my custom (as their adviser mentioned, when I took out the mortgage, is what usually happens).

Nationwide's website says that they waive a lot of the switching fees and charges, or pay for things themselves (e.g. valuation fee, legal costs etc.).

So I'm not entirely sure yet how much it will cost to move to them, with regard to exit fees from Halifax, and start-up fees from Nationwide.

However, I do have a few reasons for wanting to switch:

1. Lower interest rate.

2. Intend to pay another chunk off the mortgage a further 2 years down the line when the new fixed deal ends, so would end up on standard variable rate for remaining term which could be cheaper with a mutual than a PLC.

3. Speculative - would like to be with Nationwide in case they do go PLC to get any free money for being a borrower and saver (I've already been a saver with them for years, before you had to sign away anything to charity)


For a monthly mortgage payment of about £240 to £250, the difference in interest rates only works out to be a few pounds a month either way, however Reason No. 3 above does weigh quite heavily in my thinking.

Any thoughts would be appreciated...

PS: When the current fixed deal ends, should I pay off the lump sum to Halifax before switching (would this incur any redemption fee in itself, as well as a subsequent exit fee), or should I transfer the 36k to Nationwide with the arrangement of paying the lump sum to them to make the mortgage opening balance 25k upon transfer?