The Nationwide Building Society is to apply a reducing scale approach to all fixed rate mortgages taken out from Wednesday 8 October, where customers need to redeem their loan, or overpay by more than 10% of the initial balance per year, before the end of the fixed rate period.
The new structure, where charges reduce each year, means that customers who need to move towards the end of their fixed rate mortgage period will now pay less to exit.
Previously this early redemption charge would have remained at the same level throughout the fixed rate period.
The scale for redeeming the loan before the end of the fixed rate period will be consistent across all existing two, three, four and five year fixed rate mortgages, lowering the potential cost to 1% per year (or part year) remaining on the customer’s deal.
Richard Napier, Nationwide’s director of mortgages and savings, said: “Adopting this new more flexible approach across all our fixed rate mortgages clearly demonstrates the tangible difference our mutuality and our way of doing business can deliver.”