Avoiding Nationwide exit fee - is there a better option?

bobbly

After making some serious overpayments, my Nationwide mortgage balance is now very low, but I still have 15 years remaining on my term.

I could pay it off right now, but that would incur a £65 exit fee. However, if I keep making my regular repayments for the next 5 years, then I think there would be no exit fee (because there would be less than 10 years left at that point).

£65 doesn't seem a lot in the greater scheme of things, but I'm torn between avoiding this expense, or just paying it all off now (including the fee) so I don't have a mortgage to think about.

Would there be any other fees to consider if I waited five more years before paying it off? (I don't think there are, but it's possible I've missed something).

I guess my main question is: Are there any downsides to keeping the mortgage for another 5 years just to avoid paying the fee (the interest I'd pay over 5 years would be much less than that).

Or is it even worth keeping the mortgage for the full 15 years that are left - would that make it easier to buy another house if I decide to move later on? Would it be beneficial for my credit rating? etc?

Thrugelmir

What form does the fee take?

bobbly

I think it's just a flat £65 fee according to http://www.nationwide.co.uk/support/support-articles/rates-fees-charges/mortgage-fees-and-charges/ending-your-mortgage#tab:Endingyourmortgage
(aka mortgage exit administration fee or a redemption fee)

I see it also says: You may be charged a separate fee by your solicitor or licensed qualified conveyancer for their work relating to redemption of the mortgage and discharge of the security.
- what's that likely to cost? Must admit, I'd never heard about these things before.

ACG

Every lender I can think of charges this admin fee, most are closer to £100-120.

It is to take their name off your deeds.

bobbly

ACG wrote: »

Every lender I can think of charges this admin fee, most are closer to £100-120.

It is to take their name off your deeds.

But am I right in thinking there is no fee if I pay off my Nationwide mortgage when there is less than 10 years remaining? That's how I interpreted the information on the above link.

ACG

I dont know what Nationwides stance is. I would have assumed that fee is chargeable whether you clear your mortgage now or in 30 years, but you would need to check with them.

Thrugelmir

This is the key statement.

The charge quoted applies to mortgage contracts taken after 1 May 2005. For all other customers the fee charged will depend on the fee at the time the mortgage was entered into. Any fee that applies will be stated in your mortgage offer.

That's what you need to check.

bobbly

Phew, it is as I thought it was (my mortgage was taken out after 2005)

Just checked my annual statement and it says there is an early repayment fee of £0.00, and the £65 redemption fee does not apply if there is less than 10 years left.

[Deleted User]

Surely interest will amount to much more than £65?

TrickyDicky101

jeepjunkie wrote: »

Surely interest will amount to much more than £65?

The £65 is not part of the loan and it is possible to pay down the loan to such an extent that the remaining balance until maturity - whilst still attracting interest - is so small that the interest amount is minuscule.

I wasn't aware the exit fee was not payable within 10 years of maturity - I shall probably rethink my own plans as a result!

bobbly

jeepjunkie wrote: »

Surely interest will amount to much more than £65?

My repayments are only about 50p a month, so the interest over 5 years works out way less than £65.