Nationwide fixed 10 year deal

MABLE

I have just been to see my building society regarding my mortgage and they have offered me 5.29 without reservation fee for 10 years. Should I wait to see what happens or take them up on this offer. I think we could be the mortgage off in about 13 years. Also NW said they could withdraw this offer at any time. Any advice appreciated.

cfc125

may be worth paying the £389 fee and getting the ten year rate of 4.89%

payless

yes they charge 0.4% extra ( pa) for the no fee option

which for a 10 yr deal deals means 4% ( simple inyerest only calc) extra

Silent_Bob_3

cfc125 wrote:

may be worth paying the £389 fee and getting the ten year rate of 4.89%

Is that £389 fee for re-arranging a new deal?

Reason I ask is our first 3 year fixed (5.29%) is coming to an end and we have to get a new deal. I'm loathed to pay another arrangement fee every couple of years (thats about £4k over a 25 year period) just to continue my mortgage with them.

With rates low at present, would we better off just letting it lapse to the base rate and saving on that £389 fee? Especially with 2 cuts in interest rates predicted for the remainder of the year?

lisyloo

With rates low at present, would we better off just letting it lapse to the base rate and saving on that £389 fee?

It depends how big your mortgage is.
With a small mortgage probably not because the savings you make might not be enough to cover the fees.

The calculation is
Capital * (existing rate - new rate) *2

If this is a lot more than £389 then you should switch.
If it's less than £389 then you should stick where you are.

Note: This is a ball park calculation.
It's not exact as your capital will be going down for a repayment mortgage.
For an I/O mortgage it is correct.

Silent_Bob_3

Ok, not sure I understand how to work it out for comparison to saving against the £389.

We had a mortgage for £55k for 3 years ago at 5.29% fixed. I guess this will have come down a bit (cant tell you how much as all the paperwork is at home).

So against Nationwides 2 year fixed of 4.74% with £389 fee and 4.94% without fee what are the savings when working it out on 55k?

Woby_Tide

Nationwide Base Rate is 5.99% which is pretty much daft if you can get the 2 year fixed without a fee at 4.94%

you really need to consider cost of the reservation fee fix v no reservation fee fix

i.e. rough figure is 55000 * 0.2%(i.e. difference in interest rates) * 2 which is around £200, just as well taking the no reservation ones

Nationwide have a quick calculator which shows the mortgage cost for each of their deals if you plug in a couple of figures, you can see that way from the monthly payment just how much the difference will be over the 2 years

http://www.nationwide.co.uk/mortgage/tools/quick-quote.asp?page=inputScreen&mis=brick&mediated=no

Silent_Bob_3

Many thanks to Lisyloo and WobyTide - excellent information, now I understand it fully and know where I'm going. Excellent link there too. :j

Hobo_2

For people re-mortgaging to the Nationwide it`s £389 + £95

simonkirkland

For me it makes more sense to pay the resevervation fee:

2yr fixed deal. (borrowing £126,000)

either,
4.49% and £389 fee = £699.63/month = 167912.12 (over 2yrs)

or,
4.89% and £0 fee = 728.53/month = 17484.72 (over 2yrs)

this equates to a difference of £693.60 over 2 years...

ie. £304.60 more for not paying the fee...

but as mentioned it depends on your circumstances as if you were borrowing less the difference would be less...

Simon

Silent_Bob_3

Thats what I did - comparing each arrangement fee with the equivalent no-arrangement fee deal.

Based on £53k over 22 years the only deals where the no-arrangement fees were significantly cheaper per year were the fixed 2 year (£52/year cheaper), 2 year tracker (£123/year cheaper) and the 3 year tracker (£58/year cheaper).

Almost evreything else was the same or cheaper by paying the arrangement fee. The biggest difference was with the 5 and 10 year fixed deals with the arrangment fee - these being £66/year and £105/year cheaper than the no-arrangement fee equivalent.