Nationwide Mortgage Holiday

PsychoCenobite

Hello,

I'm trying to work out if I should apply to take the 12 month mortgage holiday feature of my Nationwide mortgage before changing to a better rate mortgage or whether I should just change my mortgage and lose the mortgage holiday feature.

In the next 2-3 years I’m hoping to be able to buy a house and I thought that by taking the 12 month mortgage holiday that I could increase my deposit savings - I’d pay the same amount that I save into my savings each month.

I've had my Nationwide mortgage for 6.5 years (18.5 years left). The first 3 years were fixed rate but then I moved onto their standard rate (3.99%) and I've not done anything with it since then.

Looking at the current Nationwide's mortgage rates, I can get a 2 year fixed rate of 1.34% (£999 fee) and 1.74% (no fee) or a 3 year fixed rate of 1.84% (£999 fee) and 2.14% (no fee), but I think I lose the mortgage holiday feature that I currently have.

So, is it better for me to take the 12 month mortgage holiday feature and then switch mortgage deal after the 12 months, or would it be better to just switch mortgage to the better rates now?

I'm having trouble working out how much I would save vs how much my mortgage would increase by if I took the mortgage holiday.

My current monthly repayments are £578 and I have about £90,000 left to pay.

Your thoughts and advise would be appreciated.

Many thanks.

Thrugelmir

Will your savings earn a better rate of interest than 3.99%?

PsychoCenobite

Thrugelmir wrote: »

Will your savings earn a better rate of interest than 3.99%?

No. I currently have the following savings accounts / rates:

Nationwide e-Savings / 0.25%
Nationwide Flexclusive ISA / 1.30%

TrickyDicky101

Are you intending to retain this property when you purchase the house in 2/3 years' time? If not, then I don't understand why you would want to take the holiday to increase your deposit (unless of course your savings would earn greater than 3.99% net of tax).

EDIT: you may well find you need to undergo affordability assessment if you request the holiday. So you may get rejected. Something to bear in mind.

Thrugelmir

Then you are better off continuing to pay the mortgage every month. You'd increase your equity further by making overpayments to the mortgage account as well.

PsychoCenobite

Thanks for the replies!

Ideally I'd like to keep my flat and to rent it out.

So, are you saying that it would be better to keep paying my mortgage every month but to switch to one of their better mortgage deals (fixed 2-3 years) and lose the mortgage holiday feature?

TrickyDicky101

Assuming the house you will buy costs more than £40k you will get hit by the additional 3% SDLT charge on second homes.

Only you can put a value on the flexibility potentially provided by a mortgage holiday feature.

Thrugelmir

PsychoCenobite wrote: »

So, are you saying that it would be better to keep paying my mortgage every month but to switch to one of their better mortgage deals (fixed 2-3 years) and lose the mortgage holiday feature?

Mortgage holidays aren't "free". Unless there's a real necessity to take a payment break, i.e. temporary reduction in income. Then best to focus on clearing the debt entirely. More so if building a property empire is your long term aim.

PsychoCenobite

TrickyDicky101 wrote: »

Assuming the house you will buy costs more than £40k you will get hit by the additional 3% SDLT charge on second homes.

I'm still thinking over keeping my flat or not and I've got 2-3 years to make a decision on that. Ideally I'd like to but I'm aware that it might not be possible... that's all for me to worry about further down the line. We might become part of Russia by then!

PsychoCenobite

Thrugelmir wrote: »

Mortgage holidays aren't "free". Unless there's a real necessity to take a payment break, i.e. temporary reduction in income. Then best to focus on clearing the debt entirely. More so if building a property empire is your long term aim.

Okay, thanks for the replies.

My gut feeling is to pass/lose out on the mortgage holiday feature and to look into changing my mortgage deal to a better rate, which could save me about £100 each month.

Thrugelmir

PsychoCenobite wrote: »

My gut feeling is to pass/lose out on the mortgage holiday feature and to look into changing my mortgage deal to a better rate, which could save me about £100 each month.

Or enable you to overpay by an additional £100 a month.