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Mortgage advice keenly sought!
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toffee_paul
Posts: 15 Forumite
Hi,
I'm looking for a little advice on our current mortgate situation.
We took out a mortgage with Nationwide two years borrowing just over £120,500 after putting down a 10% deposit. Our current deal, a 2 year fix at 3.99%, expires this week and we have an appointment with Nationwide arranged to discuss a new fix as otherwise we will move to their SMR, which is also, coincidently, 3.99% and has been since we first took out the mortage.
In hindsight I realise now that choosing a 2 yr tracker would have been the better option at the time as we would have been paying a much lower rate of interest but the talk at the time was of rates starting to rise rather than fall so we made the decision to fix instead.
Our mortgage advisor has recently recommended that we stay with Nationwide as they offer us the best value but I compared the mortages rates online anyway just to check and it turned out she was right. With that decided, I've arranged an appointment with Nationwide. I wanted to work out how much we outstanding on the mortage so after referring to the annual statement from the end of 2015, I had a figure to go off, which I then took a bit off to account for the past 7 months worth of payments made. When I was checking rates on Nationwide's website I entered this figure and the purchase price of the house as requested and searched for the latest rates for our LTV which Nationwide's website calculated as 87.5%. The site returned a rate of 2.79% for a 2 year fix. Great, we thought, it's much better than 3.99%.
Here's the thing though, we recently received a letter from Nationwide saying based on what they expect our LTV to be at the end of June, which is 80-85%, they are offering a rate of 2.08% for a 2yr fix, 0.71% lower than what their website had calculated. The letter does mention that the LTV is calculated on the outstanding balance and the House Price Index (HPI) so are they saying our home has increased in value enough to push us through to the next 5% LTV threshold and a cheaper rate as a result? To test this I went back to the Nationwide website and entered the same outstanding balance as before but entered £144,200 in the purchase price field (£10,000 the the real purchase price) making the LTV 81.48% and was given a rate of 2.19%. That's odd I thought as I would have expected to get the same rate as what was included in the letter, 2.79%, as we were in the 80-85% LTV range.
Again I added another 10k, making the purchase price field £154,200 giving us an LTV of 76.2%. The rate this time was 2.09%, almost exactly the same rate Nationwide told us we can expect in their letter, (0.01% out!). I took from this that Nationwide expect our property to be valued at £154,200 but Zoopla estimates it to be £141,000, so 13k out! Surely they don't think this?!
Is it possible this is a mistake on Nationwide's part or is it some kind of loyalty/retention deal this? We're not complaining at all just don't want to get too excited as the prospect of this rate only for them to say it's been a calculation error!
On a side note, we like to security of knowing what we're going to be paying each month so edge towards a fix but according to the rates in the letter we've bene sent, Nationwide are offering us a 2 yr tracker for 1.94%, 0.10% better than the 2yr fix. What would you guys be more tempted by in this case, tracker or fix? With the base rate expected to drop sooner or later following recent events, I know mortgage rates are supposed to follow accordingly but how quickly following a base rate change do these come into effect? If we opted for a fix and rates go lower for the duration of the fix we'll obviously feel a bit aggrevated again for paying more than we could have been but on the flip side if they start rising within a year and go beyond our fix rate we'd be glad we fixed. I know, I know... it's all if's and buts!
Any advice is greatly appreciated!
Cheers.
I'm looking for a little advice on our current mortgate situation.
We took out a mortgage with Nationwide two years borrowing just over £120,500 after putting down a 10% deposit. Our current deal, a 2 year fix at 3.99%, expires this week and we have an appointment with Nationwide arranged to discuss a new fix as otherwise we will move to their SMR, which is also, coincidently, 3.99% and has been since we first took out the mortage.
In hindsight I realise now that choosing a 2 yr tracker would have been the better option at the time as we would have been paying a much lower rate of interest but the talk at the time was of rates starting to rise rather than fall so we made the decision to fix instead.
Our mortgage advisor has recently recommended that we stay with Nationwide as they offer us the best value but I compared the mortages rates online anyway just to check and it turned out she was right. With that decided, I've arranged an appointment with Nationwide. I wanted to work out how much we outstanding on the mortage so after referring to the annual statement from the end of 2015, I had a figure to go off, which I then took a bit off to account for the past 7 months worth of payments made. When I was checking rates on Nationwide's website I entered this figure and the purchase price of the house as requested and searched for the latest rates for our LTV which Nationwide's website calculated as 87.5%. The site returned a rate of 2.79% for a 2 year fix. Great, we thought, it's much better than 3.99%.
Here's the thing though, we recently received a letter from Nationwide saying based on what they expect our LTV to be at the end of June, which is 80-85%, they are offering a rate of 2.08% for a 2yr fix, 0.71% lower than what their website had calculated. The letter does mention that the LTV is calculated on the outstanding balance and the House Price Index (HPI) so are they saying our home has increased in value enough to push us through to the next 5% LTV threshold and a cheaper rate as a result? To test this I went back to the Nationwide website and entered the same outstanding balance as before but entered £144,200 in the purchase price field (£10,000 the the real purchase price) making the LTV 81.48% and was given a rate of 2.19%. That's odd I thought as I would have expected to get the same rate as what was included in the letter, 2.79%, as we were in the 80-85% LTV range.
Again I added another 10k, making the purchase price field £154,200 giving us an LTV of 76.2%. The rate this time was 2.09%, almost exactly the same rate Nationwide told us we can expect in their letter, (0.01% out!). I took from this that Nationwide expect our property to be valued at £154,200 but Zoopla estimates it to be £141,000, so 13k out! Surely they don't think this?!
Is it possible this is a mistake on Nationwide's part or is it some kind of loyalty/retention deal this? We're not complaining at all just don't want to get too excited as the prospect of this rate only for them to say it's been a calculation error!
On a side note, we like to security of knowing what we're going to be paying each month so edge towards a fix but according to the rates in the letter we've bene sent, Nationwide are offering us a 2 yr tracker for 1.94%, 0.10% better than the 2yr fix. What would you guys be more tempted by in this case, tracker or fix? With the base rate expected to drop sooner or later following recent events, I know mortgage rates are supposed to follow accordingly but how quickly following a base rate change do these come into effect? If we opted for a fix and rates go lower for the duration of the fix we'll obviously feel a bit aggrevated again for paying more than we could have been but on the flip side if they start rising within a year and go beyond our fix rate we'd be glad we fixed. I know, I know... it's all if's and buts!
Any advice is greatly appreciated!
Cheers.
0
Comments
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toffee_paul wrote: »but Zoopla estimates it to be £141,000, so 13k out!
I'd place no value on the Zoopla estimate at all. Far too generic.
As for choice of product that's a personal decision. Fixed rates do give the comfort of knowing what your outgoings will be. When rates finally move upwards. The movement could be sharp and quick. Which may come as a shock. This is the downside of variable rates.0 -
Thrugelmir wrote: »I'd place no value on the Zoopla estimate at all. Far too generic.
Indeed. I'm not one for relying on those kind of sites but it does seem as though the house price market has increased even since we purchased out property. It just seems that because of the rate Nationwide are offering us that they think it's jumped considerably more than that even Zoopla estimate. This is why I'm wondering if it's a mistake on their part! I sincerely hope not but we'll see I suppose!0 -
They've told you they've used the house price index to calculate the new value. See if you can find what that is for yoiur area and then find the date you purchased and multiply the purchase price by the index amount.Don't listen to me, I'm no expert!0
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They have a valuation figure for your property and that is one they will use.
The website tools is there to encourage people to visit their web site and makes a generic calculation.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
What does this suggest;-
http://www.nationwide.co.uk/about/house-price-index/house-price-calculator
?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Thrugelmir wrote: »I'd place no value on the Zoopla estimate at all. Far too generic.
As for choice of product that's a personal decision. Fixed rates do give the comfort of knowing what your outgoings will be. When rates finally move upwards. The movement could be sharp and quick. Which may come as a shock. This is the downside of variable rates.
It's very unlikely to be either sharp, or quick.0 -
kingstreet wrote: »What does this suggest;-
http://www.nationwide.co.uk/about/house-price-index/house-price-calculator
?
This returned a much lower increase than what I expected which makes the LTV value they hold even stranger. Good for us though!
Since I first posted, we've had the appointment with Nationwide and switched to a 2yr tracker at 2.09%. So at the moment it's much better than the 3.99% we were on under the 2yr fix. Reading this morning that the BofE may lower the base rate as soon as this Thursday so hopefully we'll soon benefit from that.
Also, just to conclude this if others are interested... the reason we we're offered a lower rate than what I could calculate through Nationwide's website ahead of our appointment with them is because they had changed their interest rates on July 27th. The letter they sent to us predated this so I was going off out-of-date numbers. They actually increased the 2yr tracker from 1.94% to 2.09%, so an increase of 0.16%. Maybe they foreseen the potential base rate drop and wanted to compensate for it.0 -
I'm hoping Zoopla estimates are not worth the web space they are written on! Was much higher a few weeks ago and dropped dramatically!0
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I'm hoping Zoopla estimates are not worth the web space they are written on! Was much higher a few weeks ago and dropped dramatically!
Oh it's gone back up overnight!
Does anyone know, if they value your house much higher than you estimate, will they tell you? Or just keep it at what you originally put? I doubt this would happen to me as i'd need £10k over estimate to be under the next LTV bracket.0 -
No.Does anyone know, if they value your house much higher than you estimate, will they tell you?
Yes.Or just keep it at what you originally put?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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