Stay on Nationwide BMR (from pre 2009) ?

PieMistress

Hi, when I moved house 8 years ago I took over my Nationwide mortgage which was/is on the old Nationwide BMR and took out a new fixed rate for the increase to fund the new house.. So I have 2 different mortgages with 2 different interest rates. The 5 year fix expires in March 2022 on 1.89% and the other one is just chugging away on the Nationwide BMR of 2.10%.  I have been overpaying a bit on both mortgages.  My dilemma is.  With interest rates being low should I move the Nationwide BMR onto a fix now , just leave it where it is and stay on the pre 2009 BMR, or wait until next year and merge both of the mortgages together - although I am aware that the interest rate situation might have changed significantly by then. I do have savings so could overpay a bit more, but was unsure about putting a chunk into one of these mortgages given the uncertainly about employment with COVID (the BMR has no cap on % to overpay) 
Thanks for any feedback.

getmore4less

Early on during the low rates(that have been around over 10 years now) the BMR was a keeper.

It has been a few years now that for many people they should have switched  unless they needed the overpayment pot to be kept alive.

How big are the 2 bits?
What is your LTV?
What is your full term?
What can you afford to pay?

PieMistress

Hi! Thanks for your reply:
 Fix is about £37K and the BMR is about £57K.  
There is no limit on how much I can overpay on the BMR (I overpay £150pm at the moment).
I can overpay 10% on the fix per annum which I do in a lump sum each anniversary in April.
 I think LTV is about 28-30%.  
12 years to go on the term.
I am very cautious hence why I feel like I need to keep my savings in my ISAs rather than pay more into the mortgage as have two young children and my employment isn't guaranteed until retirement as its a fickle industry. I know interest rates on savings are abysmal though, dilemma!
Any advice gratefully received.

getmore4less

Not sure why you are overpaying  a 1.89% rate when you have a 2.10% rate 

Sticking with NW.

LTV < 60% gets the best they have unless you mean equity is 28%-30%  LTV 70%)

looking at what you have over 12years
£57k 2.10% £448pm
£37k 1.89% £287pm.

Nationwide have a
£999 fee
2y 1.09%
5y 1.49%
or 1.49% £0 fee for both
looking at the 5y fix options on your total

amount	rate	payment	owing after 5y
£94,999.00	1.24%	£713.28	£56,944.38
£94,000.00	1.49%	£713.28	£56,863.17

waiting to combine and pay a fee wont help.

that leaves switching the £57k now
if you let it run for 5 years 

amount	rate	payment	owing
£57,000.00	2.10%	£448.15	£34,979.69

switch to the 5year fix and pay the same

amount	rate	payment	owing
£57,000.00	1.49%	£448.15	£33,507.86

you will save ~£1470 over 5 years.
can switch  the other bit when the time comes.
with the same payment to still finish in 7years after the 5y you need a rate better than 3.36%

amount	rate	payment	owing
£33,508.00	3.36%	£448.15	£5.56

the question is will the fixes go up faster than the tracker and overtake, when you have 1.9% safety net to break even over the BMR not going up

That's before the overpaying you are already doing.

PieMistress

Hi, I really appreciate your reply thanks and your calculations!  Yes, I am not sure why I have overpaid more on the fix.  I vaguely recall a reason but cannot remember it for the life of me now! We have about 68-70% equity in the property.  I don't know if NW will let me switch the BMR onto a fixed unless I keep the term the same - in fact I think that's what they will say. Looking at those figures I can stay on the BMR (and remain an unknown % wise) or move to a fix and save £1470 in interest over 5 years. Although that does tie me in overpayment wise as I would be unable to overpay more than 10% per annum of the original amount.
Thanks so much again, definitely food for thought there.

getmore4less

Are you hitting overpayment limits?

PieMistress

getmore4less said:

Are you hitting overpayment limits?

On the fix yes as it is capped at 10% p.a. of the original loan value.  There is no overpayment limit on the BMR.that I am aware of.

getmore4less

Are you going to be hitting 10% of the total (£9k this year)

TrickyDicky101

Do you have a borrowback facility on the BMR mortgage element?

PieMistress

We have overpaid 10% annually - on the fix - for the past 3 years and overpay about £200 p/m on the BMR product.
This applies to our BMR product : If your client(s) took out their mortgage product deal with Nationwide on or before 29 April 2009, they will move/have moved to our Base Mortgage Rate (BMR) at the end of their deal. Your client will also have access to borrow back and payment holiday facilities. The BMR is guaranteed to be no more than 2% above the Bank of England base rate. If your client chooses to switch to a new mortgage product, they'll no longer have access to the BMR or its facilities and will revert to our Standard Mortgage Rate (SMR) which has no upper limit or cap.

TrickyDicky101

The borrowback can be a very useful facility to have access to - extracting the overpayments back from Nationwide is very easy (literally a phone call) so you still retain almost immediate access to your cash.  You also save interest charges at 2.1% (which almost certainly exceeds any Cash ISA rates if you hold funds in these).  
The above is why I held on to our NW mortgage even when the rate wasn't competitive - I had an overpayment reserve virtually matching the outstanding balance and could draw on it as and when required (obviously then my mortgage payments did rise as I had to repay NW).