Re-mortgage - Early Repayment Charge (Nationwide) - thoughts?

2016housebuyer

I have a Nationwide mortgage on a shared ownership property purchased in August 2017, I went for a 5 year fixed rate at 3.19% It has an early repayment clause of 5/4/3/2/1% so if I were to re-mortgage after August this year I’d need to pay 1% which is approximately £750. My share was 90k (total property value 300k) and I paid a 10% deposit, so the mortgage was 81k – as at today I owe roughly 74.5k

I’m considering re-mortgaging early (after August when the charge drops to 1%) as I’m aware of long term restructuring at work and I want the security of another long fix. We’ve not had formal consultation or anything like that but we have had presentations about long term plans and that involves possible redundancies within my department in early 2023.

As my mortgage ends in August 2022 it’s very likely that I will be in a formal consultation phase by then so in order to avoid that (as I know that could impact on being able to re-mortgage) I was thinking of re-mortgaging a year early. Also I worry about a post-COVID recession/increase in mortgage rates so although I have to pay the ERC fee now it would give me peace of mind for 5 years.

Are there any glaring difficulties in doing this or anything I’ve not considered? I had a broker last time as I was a FTB but as my income has increased and the LTV decreased I can’t see an issue with re-mortgaging with Nationwide so would apply myself.

Also, a 5 year fix is 2.84% (no fees) and a 10 year is 3.54% (no fees) – 5 years is £12 a month cheaper than I pay now and the 10 year is £15 more per month. I don’t plan on moving (early 40’s, no kids and in any case it’s a 3 bed house), in my shoes would risk averse people consider the 10 year fix?

K_S

@2016housebuyer You always have the fall-back option of doing a product-switch/rate-switch/product-transfer and staying with Nationwide at the end of the current fix.

As long as there is no change in term or loan amount, that should not involve any credit-checks, income assessment, underwriting etc. so it shouldn't matter what your income or future outlook is.

More likely than not, you should have competitive product-switch options with your lender being Nationwide.

2016housebuyer

K_S said:

@2016housebuyer You always have the fall-back option of doing a product-switch/rate-switch/product-transfer and staying with Nationwide at the end of the current fix.

As long as there is no change in term or loan amount, that should not involve any credit-checks, income assessment, underwriting etc. so it shouldn't matter what your income or future outlook is.

More likely than not, you should have competitive product-switch options with your lender being Nationwide.

Thnaks for the reply, with a product-switch would they not want me to declare any situation I'm aware of that could affect my job and therfore ability to pay ie being in consulation phase for redundancy? This was my thought process behind re-mortgaging early, even if it meant incurring the £750 ERC

[Deleted User]

They cant get rid of you so they will offer you existing client products and as long as you do it online through a non-advised or 'execution only' process there will be no advice so you dont have to worry about a change of circumstances impacting you

kingstreet

If you try to do a rate switch with Nationwide during the ERC period of your existing mortgage, you will need to pay the ERC upfront as it will not allow an ERC to be added to the loan in such circumstances.

2016housebuyer

Deleted_User said:

They cant get rid of you so they will offer you existing client products and as long as you do it online through a non-advised or 'execution only' process there will be no advice so you dont have to worry about a change of circumstances impacting you

Thanks, I had no idea that was even a thing - I’m quite a worrier so in a way I’d quite like to fix now (well, after August) while rates are affordable but it seems that if I don’t then I can can still switch to another fix at the end of my deal regardless of what’s happening with my job. I assumed I’d have to go through their affordability checks etc to re-mortgage 

2016housebuyer

kingstreet said:

If you try to do a rate switch with Nationwide during the ERC period of your existing mortgage, you will need to pay the ERC upfront as it will not allow an ERC to be added to the loan in such circumstances.

Thanks, I hadn’t thought about it but it would only be £750ish so no problem to pay upfront. 

[Deleted User]

2016housebuyer said:

Deleted_User said:

They cant get rid of you so they will offer you existing client products and as long as you do it online through a non-advised or 'execution only' process there will be no advice so you dont have to worry about a change of circumstances impacting you

Thanks, I had no idea that was even a thing - I’m quite a worrier so in a way I’d quite like to fix now (well, after August) while rates are affordable but it seems that if I don’t then I can can still switch to another fix at the end of my deal regardless of what’s happening with my job. I assumed I’d have to go through their affordability checks etc to re-mortgage 

Remortgaging is only when you change lenders but you are correct that this would involve a new financial assessment