Nationwide BMR Interest-Only

stem77

I've read on the forum a number of posts regarding when is the right time to switch from a mortgage on Nationwides BMR to a new fixed rate. But none has specifically related Interest-Only mortgages, which I took out @ over 6%.

When my mortgage ended 2 years ago, I switched over to the BMR (£250 a month) and started overpaying £500 a month to pay off the capital.

I'm trying to figure out when is the best time to jump to a fixed?
(mortgage amount 100000 over 18 years)

amnblog

Are you asking us to predict when the Nationwide BMR will rise to exceed their fixed rates?

stem77

amnblog wrote: »

Are you asking us to predict when the Nationwide BMR will rise to exceed their fixed rates?

Just general advice from more informed posters.
I was looking to stay on BMR till late 2015.

amnblog

Your overpayments suggest rising rates are manageable.

You can take action to fix when NWDE BMR gets too 'hot' for you.

stem77

amnblog wrote: »

Your overpayments suggest rising rates are manageable.

You can take action to fix when NWDE BMR gets too 'hot' for you.

Thanks for the reply.

Thrugelmir

stem77 wrote: »

I was looking to stay on BMR till late 2015.

BOE base may well have increased once if not twice by then.

stem77

Thrugelmir wrote: »

BOE base may well have increased once if not twice by then.

Yes I'm aware of that, but reading hints that it may only be 0.25% at a time to get population used again to Interest Rate rises. So Nationwide BMR would only be 3%. Hints that BOE rate by end of 2017 of 2.5/3% meaning BMR would be 4.5/5%.

I suppose I'm looking at a 4 year plan with a £750 a month budget. Stick with the BMR & overpay to pay off capital (remember I'm on an interest only mortgage at moment).
or take a 4 year fixed repayment mortgage. Repayments are about £650 a month, so will be able to overpay an extra £100 a month.

Just looking to pay off as much capital as possible.

kidmugsy

stem77 wrote: »

Just looking to pay off as much capital as possible.

Then shouldn't you just stick with the low interest rate deal for as long as possible? Nobody actually knows when rates will rise, or by how much, or for how long. It's quite conceivable that rates will rise here and in the US, that the consequences will look dire, and that they'll cut them again.

Anyway, look how wrong people have been about rate rises for the last few years.
http://blog.redington.co.uk/Articles/Dermot-Dorgan/May-2014/WAITING-FOR-RATES-TO-RISE.aspx

getmore4less

Moving of base+2% is likely only sensible for very few people.

fixing just ties you into higher rates the short term saving is unlikely to better than the long term tracker.

get a broker to do proper forecasts that show the fixed is the right thing will be like getting blood from a stone.

getmore4less

Losing I/O would be a bad move there is rarely a good reason to increase contractual payment without other factors that make cost savings.

dimbo61

You are doing the right thing by staying on the BMR of 2.5% and overpaying the mortgage every month.
Now £500 a month is £6000 a year and that is a good overpayment depending on the size of the loan and term.
Could you use " Whatsthecost" and put in your loan size, term and interest rate.
This will give you the Interest only payment which you are making and the amount you need to pay IF it was a repayment mortgage !
We have overpaid big style over last 8 years when paying Twice your mortgage rate and can now see light at the end of the tunnel