Noticed some changes? You can read all about the improvements we've made on the Forum in our latest announcement. We also have a new set of Forum rules so please take the time to give them a read and familiarise yourself.

Reverting back to BMR

edited 30 November -1 at 1:00AM in Mortgages & Endowments
6 replies 903 views
pollyanna24pollyanna24 Forumite
4.3K Posts
Part of the Furniture 1,000 Posts
✭✭✭✭
edited 30 November -1 at 1:00AM in Mortgages & Endowments
Just wanted to get an idea of what other people would do in my situation.

Currently on a 5yr fix with the Nationwide of 5.63%. Runs out April 2013. It will revert to the BMR + 2% after that, so currently 2.5%.

This seems really cheap and one of the cheapest we will get out there at the moment, but I'm not sure whether I should be fixing again.

At the moment, we are allowed to overpay up to £500 a month which we have been doing for over a year.

After April, my mortgage will go down from £992 a month to £556 a month which is quite amazing really! We intend to keep paing the same as what we were, so £500 overpayment plus the amount we will now be saving with the new rate, i.e. £436, so a total of £936 on top of our mortgage payment a month.

We wouldn't be able to do this kind of overpaying with a fixed rate, so should we stick to the variable rate?
Pink Sproglettes born 2008 and 2010
Mortgages (End 2017) - £180,235.03
(End 2018) - £169,999.96
(End 2019) - Target £160,000 DID IT!!! (159,906.64)
(End 2020) - Target £147,500. £146,215.25 DID IT!!!!

Replies

  • ThrugelmirThrugelmir Forumite
    81.6K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    We wouldn't be able to do this kind of overpaying with a fixed rate, so should we stick to the variable rate?

    At the current stick to the SVR and make the most of repaying the debt.

    Though monitor the financial news. As at some point in the future interest rates will edge upwards.

    Remember, the less you owe the less the impact of any rate change.
    It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." — George Soros
  • kingstreetkingstreet Forumite
    36.7K Posts
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    In my opinion, yes.

    Do not give up base + 2% BMR unless you absolutely have to.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • pollyanna24pollyanna24 Forumite
    4.3K Posts
    Part of the Furniture 1,000 Posts
    ✭✭✭✭
    kingstreet wrote: »
    In my opinion, yes.

    Do not give up base + 2% BMR unless you absolutely have to.

    Just out of interest, what do you mean by "absolutely have to"? Do you mean if rates start shooting up or something?
    Pink Sproglettes born 2008 and 2010
    Mortgages (End 2017) - £180,235.03
    (End 2018) - £169,999.96
    (End 2019) - Target £160,000 DID IT!!! (159,906.64)
    (End 2020) - Target £147,500. £146,215.25 DID IT!!!!
  • kingstreetkingstreet Forumite
    36.7K Posts
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    That's one possibility, I guess.

    I meant you should avoid giving up this rate if there is any other way of raising money you might need in the future, in the case of a house move, or home improvements etc.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • dimbo61dimbo61 Forumite
    12.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    Do you have any emergency funds?
    Now you should get 2.5% in a couple of Cash ISA,s Cheshire BS being one so I would make sure you have up to £16,000 in savings and then overpay the mortgage.
  • ThrugelmirThrugelmir Forumite
    81.6K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    Just out of interest, what do you mean by "absolutely have to"? Do you mean if rates start shooting up or something?

    My gut instinct is that once BOE base rises. Then the available spread of rates across the market will narrow. 2% may well look very good.

    Banks and Building societies pay far higher FSA levy's than a few years back. So sub 2% above base rates are going to be the exception.
    It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." — George Soros
This discussion has been closed.
Latest News and Guides

New plastic £50 note in circulation

Inventor and codebreaker Alan Turing is pictured

MSE News

TV MoneySaving tricks

How to save on Sky, Netflix, Now TV, Prime Video and more

MSE Guides

Pret subscription loophole

Get a month's worth of free smoothies, frappes, coffee etc

MSE Deals