I have been offered a Nationwide remortgage as an existing borrower and want to know whether or not to fix my mortgage and whether or not I should stay with Nationwide.
Nationwide are a large lender and very competitive with their remortgage terms but you should always check with an independent mortgage broker who charges by fees rather than commission to see if you are better remortgaging elsewhere.
If you are considering a Nationwide remortgage be very careful with the 'boring old, but potentially very expensive' notes at the end of the documents sent out by Nationwide. The first page highlights a bold Â£300 cash-back. However, the second page states that if you apply for a Nationwide remortgage and your original deal was reserved on or before 29.4.09, your new product would revert to their base mortgage rate at the end of its term. If you switch now to a new Nationwide remortgage deal, it will revert to their standard mortgage rate at the end.
The first has a cap of being no more than 2% above the bank of England base rate; the latter has no cap at all so the Â£300 cash-back could be a very expensive slip. For example, 0.25% more on the standard mortgage rate would be Â£375 for a Â£150,000 mortgage, and that’s per year. Â All mortgages reserved before 3.3.2010 also have the ability to take mortgage holiday repayments but those reserved afterwards do not. Think very carefully before you sign that final document and speak to your independent mortgage broker.
Fixing your Nationwide remortgage? I am still of the view that inflation is simply a mixture of a weaker currency and speculation in commodity prices (investors can effectively hide their purchases but buy oil, coffee, wheat, minerals etc) which has driven prices through the roof, even though we are still in global doldrums financially. The weaker currency has the wonderful benefit of making sure imports are more expensive and exports are cheaper, and that holidays here are cheaper for foreign visitors, whilst overseas holidays are indeed more expensive for us. This is good for the economy obviously, but it can create inflation as most food and energy is imported.
I don’t believe the commodity purchasing will be allowed to continue unabated and I don’t believe the UK is in a position financially to take any interest rate rises. Most people are just getting by as it is. Higher inflation is also good for UK debt – 100% inflation effectively gets rid of all your debt in one year – so it’s easy to see why a government would allow inflation to run a little higher than normal for a while. So I don’t see interest rates rising (any more than 0.25%) for at least 12-18 months.
One year fixed rates are as rare as a day without news.
A two year fixed deal would probably be best given the lack of smaller one year terms. The best two year rates are at Abbey with a rate of 2.99%, 0.7% better than the middle of the road government backed banks like C&G. For those who are on a standard variable rate or tracker with their bank or building society they will be close to 0.5%, so this deal wouldn’t be that attractive as its unlikely rates will be more than 1% higher in two years from now given the debt we have to unwind here in the Uk and the unemployment concerns.
There are some building societies that offer an interesting product which gives flexibility to homeowners. For example the Woolwich offers a 'Great Escape' with a 2.89% lifetime tracker which tracks the base rate plus 2.39%. Its benefit is that although you are locked in for two years, they will allow you to switch over to any of their fixed rates during that period. It’s a halfway house, so rather than jumping into a fixed rate now you can track the base rate and if there are any real sustained inflationary issues surfacing, you could hop onto a fixed rate to protect your outgoings.
For a free mortgage review call Ronan on 0845 230 9876, e-mail firstname.lastname@example.org or take a look at our website www.wwfp.net.
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Ronan Marrion is an Independent Mortgage Broker with Worldwide Financial Planning Ltd who is authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'