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    Mortgage Calculations

    Hi - I'm currently on a 5 fixed rate mortgage with the Nationwide that is due to expire early next year. I've checked their web site to look at what the current SVR is and was pleasantly surprised to read that existing customers who had a Nationwide Mortgage pre April 2009 will revert to a SVR of no more than 2% above the bank of england rate (currently this would mean an SVR of 2.5%). Assuming there are no more increases in the base rate between now and my existing mortgage expiring can someone advise me on what the reduction is interest rate will have on my monthly repayments. I'm currently on a rate of 5.20%. Is there a calculator that I can use to work out what my reduced monthly repayments will be?
    Thanks for all help.

    11 Comments

    google bbc mortgage calculator, very easy to use

    Don't get too carried away with your celebrations!
    my view is 2 % above Bank of England Base Rate will be high by comparison when the mortgage market gets back to reality.
    If you can think back to when you took you mortgage out what was the base rate then? it was 4% so they fixed it a 1.2% over the base rate at that time.
    wait until April and then look around to see what's happening in the mortgage market.

    Original Poster

    The Fox;6691472

    Don't get too carried away with your celebrations! my view is 2 % above … Don't get too carried away with your celebrations! my view is 2 % above Bank of England Base Rate will be high by comparison when the mortgage market gets back to reality.If you can think back to when you took you mortgage out what was the base rate then? it was 4% so they fixed it a 1.2% over the base rate at that time.wait until April and then look around to see what's happening in the mortgage market.


    That's the problem at the moment. There are no comparable deals to be had. Nationwide are offering a 5 year fixed rate at 5.68% if you have a 40% deposit. I agree that there will hopefully be more fixed rate products available next year. However if there are not and the bank base rate stays as low as it is then I'll be quite happy transferring to the 2.5% SVR until more competitive products become available.

    The Fox;6691472

    Don't get too carried away with your celebrations! my view is 2 % above … Don't get too carried away with your celebrations! my view is 2 % above Bank of England Base Rate will be high by comparison when the mortgage market gets back to reality.If you can think back to when you took you mortgage out what was the base rate then? it was 4% so they fixed it a 1.2% over the base rate at that time.wait until April and then look around to see what's happening in the mortgage market.



    Unfortunately lenders are not likely to significantly reduce their margin over Bank of England base rate. Certainly not within the next 12months. The supply of funds are so limited at the moment that there is not really much lender competition.
    But I do agree you should wait until nearer the time

    Banned

    I;m on nationwide SVR too.

    its a no-brainer especially when they offered me another 50K. Put that in a 7.36% 1 year bond with birmingham midshires so currently £205 per month better off lol

    Original Poster

    csiman;6692164

    I;m on nationwide SVR too.its a no-brainer especially when they offered … I;m on nationwide SVR too.its a no-brainer especially when they offered me another 50K. Put that in a 7.36% 1 year bond with birmingham midshires so currently £205 per month better off lol


    I don't get the logic. Borrowing an extra £50k will increase your monthly repayments by approx £270 assuming the rate stays at 2.5% and your original loan was £100k over 20years. You have put the 50k in a high interest bond at 7.36% that will generate about £300 per month interest. You're therefore making approx £360 per year. What happens when the bank base rate goes up.. Won't you be worse off? Am I missing the point somewhere? It seems like a high risk to make a small profit.

    Banned

    dinglebin;6692781

    I don't get the logic. Borrowing an extra £50k will increase your … I don't get the logic. Borrowing an extra £50k will increase your monthly repayments by approx £270 assuming the rate stays at 2.5% and your original loan was £100k over 20years. You have put the 50k in a high interest bond at 7.36% that will generate about £300 per month interest. You're therefore making approx £360 per year. What happens when the bank base rate goes up.. Won't you be worse off? Am I missing the point somewhere? It seems like a high risk to make a small profit.


    who said I borrowed 100k?

    I had a £100 mortgage (so they look after the deeds).

    I took a £50K offer out at 2.5%

    invested at 7.36%

    interest difference = 4.86%

    £50K @ 4.86% = £2430 pa = £202.50 per month

    I dont pay tax on the interest as I cant be bothered to work as the taxman takes it all when I do lol

    Original Poster

    csiman;6695594

    who said I borrowed 100k?I had a £100 mortgage (so they look after the … who said I borrowed 100k?I had a £100 mortgage (so they look after the deeds).I took a £50K offer out at 2.5%invested at 7.36%interest difference = 4.86%£50K @ 4.86% = £2430 pa = £202.50 per monthI dont pay tax on the interest as I cant be bothered to work as the taxman takes it all when I do lol



    I didn't say you borrowed £100k. I said lets assume. If you borrowed £50k how long was the term?

    Original Poster

    Even if you borrowed £50k over 25 years at 2.5% the monthly repayments would be £230.

    You'd earn £50k @ 7.36% = £3680 pa = £306. A return of only £76 per month

    Banned

    dinglebin;6697823

    Even if you borrowed £50k over 25 years at 2.5% the monthly repayments … Even if you borrowed £50k over 25 years at 2.5% the monthly repayments would be £230.You'd earn £50k @ 7.36% = £3680 pa = £306. A return of only £76 per month


    I think you need to review your maths. Ignore the term as its irrelevant for an interest only mortgage. I will just repay the mortgage outright when the SVR is higher than the interest rate I can achieve.

    2.5% of 50K is £1250 = £104.16

    7.36% of 50K = £3680 pa = £306. A net return of only £202 per month
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