Early Repayment Fees for Existing Nationwide Customers

MrsFLA

When it comes to early repayment charges on mortgages in Oct 2014 Nationwide tried to make this fairer (statement on the Nationwide website dated Oct 2014)

BUT it is only fairer for new customers - old customers have to put up with old rates. I for example have to pay 5% early repayment on a mortgage deal ending in 2016 - if I was a new customer with 18 months left on the 5 year fixed rate this early charge would be 2% - how is this fair! Especially if I want to take out another Nationwide mortgage anyway!

Does anyone else have this problem or feel they are loosing out for being a loyal nationwide member?

I think this is worth investigating - how comes a company who says it is run in the interests of members is penalising loyal customers and rewarding new customers?

kingstreet

Nationwide isn't penalising you.

The market counterparty which provided the rate swap to provide your fixed rate back in 2011 required a 5/5/5/5/5 redemption penalty profile in return for its commitment.

If you want out, Nationwide has to pay that fee to them and it doesn't make enough profit on the average mortgage to be able to meet that cost.

Now, Nationwide appears able to fund fixed rates with a 5/4/3/2/1 profile. It's just the way the market has eased in the last three or four years.

You have had the certainty of your monthly payments not rising over the last three or four years and that is the reason to buy a fixed rate. Unfortunately, the continued low rates and an attack of "buyer remorse" shouldn't undermine that.

mrginge

Unfortunately you have misunderstood the concepts and costs behind an ERC.
Kingstreet explains it perfectly, so there really is nothing more to add.

MrsFLA

Thanks for the clear explaination - this has set my mind at rest somewhat and makes sense - which is more than Nwide did on the phone when I asked someone to explain it to me.
Thanks for your quick reply