To get a deal or not get a deal?

Goodjob

I'm currently with Nationwide and am on their Base Mortgage Rate (BMR) which is base plus 2% i.e. currently 2.5%. I have 58K left on my mortgage over 9 years and overpay £100 per month. I don't need to fix to have security as I can financially cope with variations in the rate. The big question for me is - am I financially better off taking a deal to not?

The big downside  is that if I took a deal I would end up on the Nationwide Standard Mortgage rate (SMR) at the end of the deal which is currently 3.99% and has no upper limit or CAP. To me that would mean that I would have to move form deal to deal to keep the rate down but incurring admin fees along the way.

What would you do?

penners324

What Nationwide deal has been offered? They'll have some options without fees.

Goodjob

There are various 2, 3 5 year deals available with or without a £999 admin free eg 2.39%  over 5 years and no admin fee or 2.04% over 5 years with a £999 admin free. Both deals would put me on the SMR when the deal ends.

Goodjob

Any thoughts? 

jrawle

If the rate is lower on a fixed deal, go for a deal! The bank rate is only going to go up further in the short to medium term. At the end of your fixed deal, you simple choose another. The SMR is just to catch people who are too lazy to do so. (Staying on the BMR being a good deal is an anomaly caused by the exceptionally low interest rates. I was like you with my previous Nationwide mortgage and stayed on the BMR, but in the pre-2008 world that would not have been the case.)

Nationwide always offer a fee and no-fee version of their mortgages, with the fee usually £999. For a small balance like your mortgage, it will be cheaper to go with the no-fee option (although do check: when you get a quote on the website it tells you the total cost.)

The final consideration is the limit on overpayments with a fixed mortgage. This is 10% of your "original balance" per year. However, a quirk of Nationwide is that this figure is the original advance when you first took out a mortgage with Nationwide, not the balance when you switched to your current deal. (In your case, it's not an issue anyway, as you overpay £1200 which is clearly less than 10%.)

getmore4less

do you mean 2.75% current rate?
don't forget the other benefits of the BMR.

BMR has not been competitive for quite some time fixes and trackers  have been below for a few years now

not sure why you have not switched before

The sweet spot was last year
Shame you did not look when it was 10y to go

April 2021  with base+2% at 2.1%  
5y no fee was 1.49% 
10y no fee was 2.09% ( and stayed at that till very recently

Anyway do the numbers for today, we don't have a time machine

£58k 9 years 2.75% is ~£607pm add the £100pm overpayment and look at the 5year options
2.24% £999 fee
2.49% no fee

amount	rate	payment	owing
£58,000.00	2.75%	£707.00	£21,119.75
£58,999.00	2.24%	£707.00	£21,141.73
£58,000.00	2.48%	£707.00	£20,535.87

Save around £600 before any rate rises over the 5 years.

at 2.48% with the overpayment paid off in 7.5y

about right for a further 2y or 3y fix with no fees.

the key question

Will fix rates go over base+2% again because fixes have been tracking up and the gap narrowing.

Sistergold

If you should decide to fix/change now  all you will need to do is switch to another product or remortgage before you move to SVR.