Overpayment date?

snowmen

MrMicawber wrote: »

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?

if I overpay say £600 after the day of the month my mortgage is taken out then this comes straight off the capital. The payment stays the same each month but the term of the mortgage is recalculated accordingly - basically the term of the mortgage is calculated taking into account that there was a one off overpayment and then assuming that from then on you just pay your normal amount. Obviously if you overpay again everything gets recalculated again the next month.
The important thing if you want to reduce the term of your mortgage with nationwide by overpaying is
1. you ring them up and set up reducing the term when overpaying rather than the default which is just reducing your monthly payment. They can do this over the phone.
2. make single overpayments of £500 or more a month for it to trigger. If you are overpaying £250 a month I suggest saving for 2 months and then paying it in one go.
3. make sure you make the overpayment AFTER your planned mortgage payment date that month.

Hope this helps.

emh_2

I have 2 nationwide trackers and have been over paying 500 each month for a couple of years and only recently found out about the timing impact. One product has its term reduced every month, but the other doesn't (it just comes off the capital) even though I asked for both to reduce term not payments. However, does it really matter? as if the capital is being reduced then the interest is also reduced (calculated daily), and you can get them to reduce your term at any time. Have I got this right or am I missing something?

Susan_C_4

If you want/can afford to pay off more than £500 a month than you can ask Nationwide to reduce your term by a few years, which will increase your standard mortgage payment each month e.g. from £600 to £800 then you should be able to pay an additional £500 each month without penalty. Obviously you need to ensure that you can comfortably afford the new payment. We have done this recently with no penalty and the mortgage will be paid sooner

uzubairu

Susan_C wrote: »

If you want/can afford to pay off more than £500 a month than you can ask Nationwide to reduce your term by a few years, which will increase your standard mortgage payment each month e.g. from £600 to £800 then you should be able to pay an additional £500 each month without penalty. Obviously you need to ensure that you can comfortably afford the new payment. We have done this recently with no penalty and the mortgage will be paid sooner

We've just done that too.
Hoping to be mortgage free by 2016.