Mortgage Stay or Go?

richy2k6

Back in 2006 I stupidly started a 10 year fixed rate with Nationwide. Since then I've moved house and as there was 6 years left on the fixed rate had to leave that mortgage as is and take a second for the additional borrowing. My LTV is about 74% so the second mortgage is just starting a 3 year fixed at 2.44%. My problem is that I'm not sure what to do with the original mortgage. I can pay £1500 to end the fixed rate early then I could put it on the same rate as the second mortgage and I'd be saving £110 per month. So my question is do I do this or do I see the remaining 4 years out and go on to Nationwide's BMR which I believe tracks at 2% above the bank of England base rate?

kingstreet

AIUI if you repay the fix with Nationwide, you have to leave them. They do not offer new products to borrowers repaying a mortgage and paying a penalty to do so.

richy2k6

I've spoken to them and I can definitely pay £1442 to leave the current mortgage and switch to a new deal where I would pay £106 less each month for the next 3 years. The problem is after 3 years I would go on to their standard rate of 3.99% unless of course I switch to a new deal and will similar deals be available in 3 years? Whereas if I stay on the current product and pay £106 more each month after 3 years 5 months I would be tracking above the bank of england rate by 2% for the life of the mortgage.

kingstreet

Really?

That's a recent policy change then, because it's been covered widely on here over the last couple of years.

kingstreet

As this would be an important policy change, I've just spoken to Nationwide.

If you are not moving home, you cannot pay the ERP on a mortgage and switch to a new rate with them.

The only time this is allowed is on moving house, if you do not wish to port the product to a new mortgage. The only option is to remortgage to a new lender and as this involves moving the whole mortgage, the total penalty would be payable on both sub-accounts.

I suggest you contact Nationwide again as you are being given incorrect information. Please ensure you make clear the circumstances, that you are not moving home.

richy2k6

I've just called Nationwide back and have been assured I can pay the ERC and switch my deal. I was told that it was a relatively recent policy change and that if I'd called a month or so ago I wouldn't have been able to. The only restriction is you can't add the ERC on to the mortgage balance so need to pay with a debit or credit card.

So back to my original question has anyone any advice on whether to pay the ERC and switch or hang tight for 3 years 5 months to go on to their BMR?

kingstreet

Nationwide telling different people different things?

Surely not.

Hope it all works out well for you. Hopefully, one of the members with an opinion on such issues will be along to continue your discussion.

Coops71

Ive just paid the fee and switched to lower fixed 5 year deal! was on 5.79% with 5 years left to run and switched to a 2.99% 5 year fix
The only wrorry was losing the BMR option at the end of the deal but i just thought id properly fix again any way with 15years left to run ?

Coops71

That is still with the Nationwide,one phone call no fees (except ERC)

dimbo61

So you pay £1500 ERC and save £110 a month for the next 36 months nearly £4,000
If you overpaid that £110 a month !!!!

Coops71

The BMR is the main question here i think.....its the bit i had too think long and hard about as it is such a good rate