additional borrowing

dan_m_4

Hi,

We are already in the last 11 months of a nationwide 2 yr fix. We're moving and am tempted to increase the loan with them to avoid high fees from a new lender and early redemption. But... is it sensible to take out a new fix rate across 2 years on the second loan, knowing that the other is up for renewal next year. I save money this year, but would it be better to consolidate the whole debt now rather than try risk the rates rising into next year and having to pay more on the larger part of the loan?

dwsjarcmcd

If your moving house you have 3 choices
1. Port with the Nationwide and take the excess with them on a new product. As you say it will avoid redemption charges but not any product fees. You will probably be mismatched on your 2 part loan, which means you will be more stuck with them.
2. Port with the Nationwide as above but take the additional borrowing on a product that doesn't have redemption charges. Could be a tracker at base rate plus, or at worst SVR. When your current product finishes you can do a transfer with Nationwide or remortgage. This will depend on the size of the additional part, but could well be worth looking at
3. Remortgage away and pay the redemption charges but you will almost certainly pay a higher rate for the whole lot!

If your not adding much to your current loan, the 2nd of these could be the best, but you need to do some sums.

David

Woby_Tide

also factor in that you will be able to switch out of the current 2 year fix with 3 months left if you so wished so that's only 8 months away, by the time the moving is done you could well be 3 to 4 months into that so only have 4 months overlap. But as per the above you need to calculate what the potential costs are, the bigger one is the one to watch quite rightly.

As an added spanner in the works, depending on what your existing deal is the old redemption penalties used to decrease per month rather than the flat rate. As Nationwide can 'forward' date deals you could technically take out a new mortgage with 6 months to go but forward date it the maximum 3 months ahead. This would then mean you switch onto the new deal with 3 months left on your old deal so the rdemption should be minimal or nil(I'll admit I can't remember the exact way Nationwide calculate it i.e. if the final 3 month rule doesn't count with you forward dating a deal.)

We had similar last year in moving with 1 year left on our 2 yr fix. We took the additional borrowing on SVR with Nationwide then we actually signed up a few months back to a new deal with 5 months still left on the existing fix but forward dated it 3 months and paid a 2 month redemption of about £140. The savings both on product fee and interest made up for it instantly with the current rate rises.

lmentry

We recently moved house and still had a year left on a 2 year fixed deal with northern rock. I rang them and told them the situation ( needed to borrow about 60k more) and they tied the extra money in with my existing mortgage at the same fixed rate for a small arrangment fee of around £300. May be worth ringing your mortgage company and see if they can do something similar?

LM.

Jo.G

Just something to think about. I spoke to a Financial Advisor yesterday who told me that the Nationwide have gone to a two tier system, ie the best deals are for new customers and dont apply to existing customers, and thats why the TV adverts are no longer being shown.

dwsjarcmcd

Jo.G wrote: »

Just something to think about. I spoke to a Financial Advisor yesterday who told me that the Nationwide have gone to a two tier system, ie the best deals are for new customers and dont apply to existing customers, and thats why the TV adverts are no longer being shown.

Not sure the Financial Adviser is right about this, in fact at the moment they are giving a better deal to existing borrowers! The rates are the same but they are knocking off £100 from the arrangement fees for existing borrowers transferring the product.

poet123

We have 2 fixed rate loans (original mortgage and further home improvement borrowing)coming to an end with Nationwide end of September. We have a further loan(home improvement borrowing) with them which has 18 months left to run at its fixed rated. So,

1. Can we change to another lender for the first 2 loans?

2. would it be better to remortgage the whole lot and pay exit/penalty charges (not likely I think?)

3. Should we for ease take out another prduct with the Nationwide? OR LOOK FOR A BETTER DEAL WIT THE THOUGHT OF SWITCHING THE 3RD LOAN AMOUNT AFTER THE FIX ENDS?(oops, sorry for caps)

We have 10 years to run and total borrowing is £100k on a house valuation of £320K.
We wuld prefer a fixed rate as we have 2 expensive kids at Uni!!
Any help appreciated.