Overpayment date?

tegai1

Hi Guys,
I'm about to start overpaying my mortgage, but would like some advise on when during the month i should make the payment.

My current mortgage payment goes out on the 5th of every month. Not sure if you need anymore detail than this?

Thanks in advance

Jonbvn

The important thing is whether interest on your mortgage is calculated on a daily or yearly basis (most are daily). If it is daily, then you should overpay ASAP. If it is yearly, them save the overpayment, and overpay a day before the year end is up.

tegai1

ok thanks Jon :j

snowmen

had the same query with my nationwide mortgage. The situation with them is if you overpay before your mortgage payment date (yours will be the 5th) it just comes off the capital. However if you make this same payment after this date (so for instance on the 10th) it will either reduce your monthly payment or reduce the term of the mortgage depending on what default you have set up on your account. Didnt know this until I queried it with them.
I am on their variable repayment mortgage.

Lynn11

snowmen wrote: »

had the same query with my nationwide mortgage. The situation with them is if you overpay before your mortgage payment date (yours will be the 5th) it just comes off the capital. However if you make this same payment after this date (so for instance on the 10th) it will either reduce your monthly payment or reduce the term of the mortgage depending on what default you have set up on your account. Didnt know this until I queried it with them.
I am on their variable repayment mortgage.

Thanks for the advice as we have a fixed mortgage with nationwide and have been making overpayments for the last 3 years but I have not spoken to anyone about how affects us, Do you think it is better to speak to them now or wait until the term ends in May to find out if we can use this to reduce the term term - this is what I want but not sure about hubbie due to uncertain job situation.

uzubairu

Lynn11 wrote: »

Thanks for the advice as we have a fixed mortgage with nationwide and have been making overpayments for the last 3 years but I have not spoken to anyone about how affects us, Do you think it is better to speak to them now or wait until the term ends in May to find out if we can use this to reduce the term term - this is what I want but not sure about hubbie due to uncertain job situation.

We had been overpaying for over 2 years before we got our first letter from the Nationwide in October about reduced payments or a reduction in the term. We'd had the mortgage with them for nearly 2.5 years at the time.

You have to ring them up if you want to reduce the term, or do nothing and the monthly mortgage payments would decrease (by £47 in our case).
We have been overpaying £500 per month by standing order.

We are on a fixed rate until 2016.

snowmen

yes lynn11, as uzubairu says get on the phone to them.
the default is to reduce the payment amount but you can swop to reducing the term of the mortgage.
any overpayments over £500 then trigger the reduction in term.
not sure which way it works with fixed mortgages as we are variable but you can ask!
p.s. use the freephone number to ring them and not the number they quote in their leaflets. It still works and goes through to the same place 0800 302010.

uzubairu

We are now set up to automatically reduce the term and keep the payments the same.

MrMicawber_2

snowmen - you say above that if you pay after the payment date the capital is reduced but not the payment - does the payment get reduced the following month to bring it back into line?

taka

This is what I was told last week by nationwide...

1) Overpayments less than £500/month- These will not reduce payments but would reduce the interest due and bring the end date forwards "naturally" as you run out of mortgage to pay eventually!

2) Overpayments of £500 - the default is for this to reduce payments and keeping the same term.

3) Overpayments of £500 - if I inform them I wish this to got towards reducing the term then this will not reduce my payments and would bring the end date forwards.

2 and 3 only happen with overpayments of £500 (or more). I've not heard of there being variations in what happens depending on when you overpay though...

MrMicawber_2

I'll check - I have an ex Portman mortgage which will be transferred to Nationwide systems soon and when the fix matures next July it will go onto a new product with the standard NW terms and conditions.