Some advice would be really appreciated......

I have just recently switched my existing nationwide mortgage to a 3yr fixed deal at 5.79% (100k mortgage, 80%LTV, no reservation fee). This is due to commence on Dec 1st.

Two months ago this was a good deal, but having found out I can cancel it (without charge) I am deliberating whether to do so. My options now I see are:

1) Cancel this deal and go on the SVR for a few months and hope that better deals become available . The SVR is not at 4.69 I believe.

or

2) Stick to the 3yr fixed deal

If I cancel my concerns are two fold, one being that my LTV may go up (if prices keep dropping) and two, that lenders will start increasing fees (and my deal above had no fees), thus making any seemingly better deals going forward not as good as they may appear.

It's getting to a crunch time, I have about a week to make a decision - any help or advice would be most appreciated.

thanks,

Chris

Chris,

Many market analysts (not Del Boy) believe interest rates still have to head south a good bit more in 2009, and a range of 1.5% to 2% seems likely.

When interest rates reduce by 0.25% or 0.5% mortgage lenders take their time to offer new fixed rates because some of their lending pot comes from the money markets at the rates in force for 2, 3 or even 5 year deals.

Getting a fixed rate mortgage is a gamble of sorts but also gives you some certainty for your next few years payments but it is sickening to watch rates lowering while you pay at a far higher rate.

Personally, if I was remortgaging I would go on the SVR for now and watch and wait. You can get an idea of where long term "money market" rates are heading by looking at figures shown at top of screen on CNBC channel if you have this, and I think they are still available on BBC Ceefax finance pages. They are also probably available by searching the Net but make sure to include "UK" in your search.

Regarding lenders increasing fees, no one can tell until it happens but you have to factor the fee in to how long you expect to keep the new mortgage going, be it just 3 years or longer. Nil fees does sound attractive right now but not when paying a 5.79% deal so get out a calculator if you are on an interest only mortgage or for repayment mortgages there are calculators available freely on many websites.

I know time is short but think carefully, write down your calculations on seperate sheets of paper and then make the decision.

Thanks for the indepth and measured response. I have just been doing my sums, and what you have said makes for very clear reading.

If I stick with the SVR for a year (and it stays as it is roughly??) I will be better off by some £700 to start with, and then with a bit of luck I can get on a fixed deal at a lower rate than 5.79 which will save me some more.

Isn't it funny the way the markets have turned so quickly, I was chuffed to bits 2 months ago with 5.79%! :-)

Yep, 5.79% did sounded reasonable last week but UK interest rates were only being kept up because of the risk to inflation, have a read of Merv's reports when the B of E's minute are released every month. You sometimes get good tips from them but you also need to read between the lines as well.

Whilst I was doing BTL investing, I seem to remember the lowest fixed rates being at 4% or just over, but the base rate was then 3.5% at it's lowest and remained at that level for 21 months or so.

I reckon Britain will have low rates through 2009 but just keep on the ball and read financial pages and watch CNBC or Bloomberg regularly, don't rely on Daily Express headlines!!

Chris,

I'm in exactly the same position as you, same provider, same rate. I had a letter on Saturday saying the changes have now been applied but my current fixed deal doesn't run out until 30 November, and this letter says my new fixed deal will expire 30 November 2011 so I'm hoping I can still get out of it too.

When is your deal due to expire, and how do you know you can get out of it? Where you do get the week deadline from?

Any advice/info would be much appreciated. I too was chuffed with the fix in September but am sickened by the prospect of paying an extra £150 a month when I would have saved £150 had I gone for the tracker option!

Nick

My current deal runs out on 30th Nov and the new 3yr fixed is due to start on Dec 1st.

I contacted Nationwide on Friday and they basically said to me that even though my new mortgage doesnt start to Dec 1st they would need to know pretty soon so they can stop the new one going through. It wa suggested that I shouldn't leave it no later than the end of this week (ie giving them 2 weeks to cancel all the paperwork). I was also told that because there was no reservation fee on the mortgage I would not be charged anything to cancel it.

If you go to Nationwide website and click on contact, then a search box appears. Type in switcher, this takes you to a search page and one of the first items is 'sitcher FAQ'. ~One of these FAQ is about cancelling. There is an address to write, they clearly state you can only cancel it in writing, and not over the phone or in branch.

I am going to write to them today I think and cancel it. You likewise?

Yes, I think so. It will mean I stay on roughly the same payments I've been on at the old fix, which was 4.5%, rather than paying an extra £100 a month. I do have some concerns over fees etc when I do decide to switch again but I can't see interest rates rising much for the next year or two and hopefully fixed-rates will reflect this.

I've phoned the branch and they were quite helpful and the mortgage person who set it up will cancel it tomorrow, supposedly. But like you suggest I will also write to them to cover myself!

Thanks for all your help, this has been bugging me all weekend!

Nick

Chris & Nick,

If you haven't already done so, try and send the letters by special or recorded delivery so there is a signature as proof. Nationwide are a good crowd so all should be okay anyway, it's just helps to know your letter gets there okay.

You may also have come across another point on this forum anyway and it's a good one - why don't you pay the amount you are saving into your mortgage and it helps to clear it quicker. That's if the rises in energy bills and council tax don't take it all !

Cheers

ATM

It's funny you mention that, I was only talking to the wife this morning aout overpaying on the mortgage. Might get it paid off a little quicker...although still got 20 years to go :-)

It's worth it Chris, my brother paid his mortgage off in 14 years and I finished mine in 16 years.

Hi Chris,

Seems I am in a similar predicament. Needing to change my mortgage as the fixed term ran out 2 November. Quoted 5.74% for 2 years from Natwest for the fees to go up by £500 to £999 in just 4 days! Now my current lender - Abbey- is offering 5.69% for 3 years and a fee of just £699!! Also my SVR that my mortgage will go to is quoted as 5.54 as of 1 December - more than my fixed of the last 2 years admittedly but less than the fixed I am currently being offered!

Now I really am not a finance boffin but I do want to move my mortgage from Interest only to repayment, and there doesn't seem to be any Trackers or Variables being offered now- I believe this will come in next few days. But if I wait I could find the fixed has changed again and the fees gone up again!!

I am so confused! I am single and so only have the one income and can't afford to make mistakes - I don't have a hubby to help!! LOL! Also I am wary as I do rememeber the days of the 14% mortgages!

I would appreciate any kindly advice or logic?

Thanks.

The best advice is speak to an independent advisor, ask one of yr friends or family to recommend one....this is a v confusing time for everybody and everybody has varying opinions.....if u needed to fix yr electrics you'd call the electrician, as a mortgage is probably the biggest financial commitment you will ever make, seek the advice of an advisor....good luck

It sounds like Abbey are not doing you any favours quoting you 5.54% from 01 December. This is 2.54% over B of E base rate, have you asked them if this will take into account the recent 1.5% rate cut.

Banks are getting greedy again, this happened back in the 90's but I suppose this time it is partly down to the LIBOR (inter bank) rate which is currently very high in historical terms, I still think you should wait for a month or two at least and keep up with the finance news. Further rate cuts are widely expected and the credit crunch and recession will not go away overnight.

Even on it's own, a decrease in the premium of the LIBOR over B of E base rate, should bring fixed rates down and more favourable tracker rates should start to re-appear on the market.

I am not an IFA but have good experience in obtaining BTL mortgages and choosing the correct type of mortgage (tracker, fixed or discounted) made a difference to my business.

Also, when you do seek help to get a mortgage it can prove worthwhile to get quotes from a few IFA's as some get Exclusive rates which are a little lower than other IFA 's can obtain.

You could use this company as a comparison, maybe try them last and check what they can do for you. www.charcol.co.uk

Thank you ATM.

I guess your advice is to wait and take a look at what else is on offer? i am nervous that fees and fixed rates may go against me....

I think Abbey could only offer that rate as they don't even have any variable or tracker rates available.

It's a real quagmire to me!

I will look at what othet IFA's can offer. Thanks.

H.

Just as a footnote, Charcol are not IFA's. They are simply non face-2-face, mass market, sales-driven mortgage brokers (which is why they've had to make a bunch of redundancies recently) who can only choose products from a selection of 35 lenders, which means they're not independent either - this is what the FSA would like to call "guided sales", based on a script. Their best buy tables should be used with the utmost caution. When they say they search the marketplace for the best deal, they don't, they search their marketplace. A mortgage qualified IFA is considerably more qualified than Charcol to advise on your finances.

Brian