Is there a potential catch with remortgage offer?

[DevestatinDave]

I am coming up to the end of my two year fixed rate deal with Nationwide and I have received a letter from them offering a new deal. This is my first time having a mortgage.

I've been extremely fortunate in that my expenses have reduced and my income has increased since I first took on the mortgage so I've been paying double the mortgage each month (the goal being to pay off my 25 year mortgage in 7 years). The initial loan was at 90% LTV and my rate was 4.2%, I'm paying around £420 a month + £420 overpayment.

Nationwide have calculated that I'm currently sitting somewhere between 80-85% LTV, there are a variety of options but the one I'm interested in is a 2 year fixed rate of 2.29% which would take my payments down to around £270 (I don't have the exact numbers to hand). There is no fee on this product. I'm thinking of taking this rate and pumping the savings into the overpayment so I can pay it off even faster. I'm aware this might go over an early repayment charge so I can reduce the overpayment to stay under the radar; beyond that, is there something obvious I'm missing? It seems a little too good to be true.

Thanks

[Charlie1986]

Give Sarnie a shout on here. He has just sorted my Mortgage out and dealt with all questions we had and had sorted very quickly

[Sarnie]

Charlie1986 said:

Give Sarnie a shout on here. He has just sorted my Mortgage out and dealt with all questions we had and had sorted very quickly

Thanks!

[Sarnie]

DevestatinDave said:

I am coming up to the end of my two year fixed rate deal with Nationwide and I have received a letter from them offering a new deal. This is my first time having a mortgage.

I've been extremely fortunate in that my expenses have reduced and my income has increased since I first took on the mortgage so I've been paying double the mortgage each month (the goal being to pay off my 25 year mortgage in 7 years). The initial loan was at 90% LTV and my rate was 4.2%, I'm paying around £420 a month + £420 overpayment.

Nationwide have calculated that I'm currently sitting somewhere between 80-85% LTV, there are a variety of options but the one I'm interested in is a 2 year fixed rate of 2.29% which would take my payments down to around £270 (I don't have the exact numbers to hand). There is no fee on this product. I'm thinking of taking this rate and pumping the savings into the overpayment so I can pay it off even faster. I'm aware this might go over an early repayment charge so I can reduce the overpayment to stay under the radar; beyond that, is there something obvious I'm missing? It seems a little too good to be true.

Thanks

Why not look for a cheaper product elsewhere, to drive down the payment and interest payable, which if you keep your payments as they are, will increase the amount being overpaid each month...

[DevestatinDave]

Hi Sarnie, I am quite happy to stay with Nationwide as that would be quite a large reduction in my monthly payment for little effort. I was curious to find if there was a common condition in these types of offers that catch people out. However, I will shop around later on once I finish work. Thank you.

[Sargeant Orange]

Just been through similar but have moved to a variable with West Brom BS.

I simply reduced the term from 18 years to 12 years so that the monthly repayment stays the same as I was already paying (rate has gone from 4% to 1.4%).

To avoid any overpayment complications/charges, I also took the opportunity to reduce the amount borrowed by only asking to borrow £80k, when I owed £88k. You just need to pay your new lender the difference before the new agreement starts.

[IainT]

We've just remortgaged with NW - took the opportunity to reduce the term a few more years plus another 0.5% lower rate than we were previously on.

Took about 3 weeks from app to offer one week of which was scheduling the valuation due to diary clashes.