End Nationwide Fixed-Rate early - is this normal?...

DoubleVodka

Hi, we have our fixed-rate mortgage with Nationwide & having worked out that we would be a lot better off ending the mortgage early & paying the ERP & fees for a re-mortgage, contacted Nationwide to tell them so. They were happy to end the mortgage but said we would be unable to re-mortgage with them & would have to go to another bank/building society - is this the norm with all banks/building societies?! Seems crazy for them to lose a customer??

kingstreet

A remortgage is a new mortgage with a new lender, so remortgaging with Nationwide isn't an option. Putting it this way prevents existing borrowers looking at remortgage products, as these apply only to new borrowers to that particular lender.

Lenders often have customer retention products, or "product transfers" as one major lender terms them. These apply when the current deals comes to an end and the borrower wants something new, not the follow-on rate they normally roll onto.

Lenders can choose if they wish to accept the penalty payment and offer something new. Nationwide chooses not to. That is its prerogative. You now decide if you want to stay on your current product, or change lenders.

As a matter of interest, if you remain with them until your current deal ends, do you roll onto the 2.5% BMR, or the higher 3.99% SVR? This would depend on your current mortgage being pre-29/4/09 or post that date.

dimbo61

Are you sure you would be better off moving lender ?
COOP has a great 5 year fix at 2.79% with free legals and valuation but £999 fee. 60% MAX LTV!!!
You also have to take into account exit fees, ERC,s and other costs when changing lenders ( Chaps fees, searches, ETC)

Thrugelmir

DoubleVodka wrote: »

Seems crazy for them to lose a customer??

If you default onto the 2.5% SVR. Then will cost the Nationwide money. So a commercial decision.

haruki

I'm in the same position.
Currently 5 years through a 10 year fixed rate mortgage with Nationwide, fixed at 5.85%.

Even with the 3% early repayment charge, I think I will be much better off switching to a deal like the Co-op's, rather than being overcharged for 5 years before getting the Nationwide's Base Mortgage Rate.

Please tell me if I'm wrong!

flashg67

haruki wrote: »

I'm in the same position.
Currently 5 years through a 10 year fixed rate mortgage with Nationwide, fixed at 5.85%.

Even with the 3% early repayment charge, I think I will be much better off switching to a deal like the Co-op's, rather than being overcharged for 5 years before getting the Nationwide's Base Mortgage Rate.

Please tell me if I'm wrong!

This should tell you - http://www.moneysavingexpert.com/mortgages/fixed-discount-mortgage-guide#calc

uzubairu

haruki wrote: »

I'm in the same position.
Currently 5 years through a 10 year fixed rate mortgage with Nationwide, fixed at 5.85%.

Even with the 3% early repayment charge, I think I will be much better off switching to a deal like the Co-op's, rather than being overcharged for 5 years before getting the Nationwide's Base Mortgage Rate.

Please tell me if I'm wrong!

We were 4 years into a 10 year fix (4.79%) with Nationwide in 2010 when we decided to switch. We didn't see the point in waiting 6 more years to get the favourable rate.
We paid £2K in ERC and moved to a First Direct fee-free tracker (base + 1.79%).
In the last 2.5 years we have paid less mortgage interest with First Direct than we paid in the last full year with Nationwide.
Last year with Nationwide was approx £3,850.
Last 2.5 years with First Direct (up to Dec '12) is £3,250.

Even with the ERC we have already saved a few £1,000s.

We did take a gamble on rates staying low, but we also looked at different scenarios with the rate increasing and still felt that we would be better off making the switch.

haruki

Thanks uzubairu, that's very helpful.
I called Nationwide and, as with the OP, they told me that it was their policy not to offer any mortgage except their SVR to anyone ending a fixed deal early.

I don't think it is worry that too many customers will switch to the lower BMR - if they had offered a reasonable deal I would switched to a new product and given up my right to the BMR.
They would have kept a customer - a reliable customer they know has paid them every month for the last 15 years rather than give a mortgage to a new unknown customer.

I think the reason they are happy to see us go is that they do not want customers who are on the look out for a better deal. They make a larger profit from customers who remain on higher rates and anyone who is prepared to pay fees to switch to a more competitive rate will make them less profit in the future.

I'm going to phone the Co-op tomorrow and switch.