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have I made a stupid mistake

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  • bundance
    bundance Posts: 1,114 Forumite
    Part of the Furniture 500 Posts Combo Breaker
    Nationwide is the lender.
    5.18% fixed 10yr deal from 2006.
    A member of staff informed me I could not make any overpayments, could this info now be wrong?

    Yes, security of steady payments was my motivation to plump for the fixed deal.
    No intention of moving in the next ten years.

    thank you
  • Mrs_Bumble
    Mrs_Bumble Posts: 1,028 Forumite
    Check your offer details as most Nationwide products allow overpayments of £500 per month, no big lump sum payments but monthly overpayments of up to this amount.

    Get your original offer out and check the bit about overpayments is usually after the bit about early repayment charges.

    If you wanted security of the payments then you have it with this product, you would not have had that with a tracker product, nobody could have predicted the banks crashing around the world and causing an economic crisis and that is the only reason these products have benefitted over the last year or so, if they had gone up you would have been worrying.

    You have security with your product and you have saved yourself a small fortune in fees if you had continually remortgaged for the sake of it every couple of years.
    I am a Mortgage Adviser

    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Sorry to hijack this post but I have a relevant question. Based on an interest rate of 4.45% on a 20 year £100,000 loan how long will you be paying interest and when will you start paying off the capital. Some people say initially you pay the interest then after about 10 years you pay the capital.
    Also do your overpayments go towards reducing the capital only or do some of it go towards interest ?. If this is true then then is the best way to pay off your mortgage is make the maximum overpayments you can ?
  • mark55man
    mark55man Posts: 8,203 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    JimBoB wrote: »
    I tried to complain to the FSA time-travelling team last week, but they saw me coming.
    Funniest thing of the month

    OP - I don't think you made a mistake. I believe in 2012 interest rates will be high, and the banks will not yet have released their penalty premiums over Base rate. Any short term loan now will run the risk of renewal at higher rates later.

    I also don't really think you should be beating yourself up - there is nothing you can do. I don't think paying 5.19 on average will see you worse off.

    I have just fixed for 10 years so perhaps I am not impartial - but for security and consistency I needed to.
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • mark55man
    mark55man Posts: 8,203 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 29 August 2009 at 7:06PM
    Sorry to hijack this post but I have a relevant question. Based on an interest rate of 4.45% on a 20 year £100,000 loan how long will you be paying interest and when will you start paying off the capital. Some people say initially you pay the interest then after about 10 years you pay the capital.
    Also do your overpayments go towards reducing the capital only or do some of it go towards interest ?. If this is true then then is the best way to pay off your mortgage is make the maximum overpayments you can ?
    Look at this for the best mortgage spreadsheet

    http://forums.moneysavingexpert.com/showthread.html?t=1157173

    (Edit - + Its gradual to start with you pay mainly interest and a little capital, half way through its about half and half, and at the end its mianly capital)
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    edited 30 August 2009 at 7:49AM
    Sorry to hijack this post but I have a relevant question. Based on an interest rate of 4.45% on a 20 year £100,000 loan how long will you be paying interest and when will you start paying off the capital. Some people say initially you pay the interest then after about 10 years you pay the capital.
    Also do your overpayments go towards reducing the capital only or do some of it go towards interest ?. If this is true then then is the best way to pay off your mortgage is make the maximum overpayments you can ?

    You pay capital from the start, you do not pay any interest in advance.

    The reason the interest is high in the early years is because you have a larger loan, as the small amounts of capital get paid a little more of the payment goes towards the capital and this gets bigger every month.

    if you look in your example the first payments in each year are as follows
    year total interest capital
    1      630       371     259
    2      630       359     271
    3      630       347     283
    4      630       334     296
    5      630       320     310
    6      630       306     324
    7      630       292     338
    8      630       276     354
    9      630       260     370
    10     630       243     387
    11     630       226     404
    12     630       208     422
    13     630       183     442
    14     630       168     462
    15     630       147     483
    16     630       125     505
    17     630       103     527
    18     630        79     551
    19     630        53     577
    20     630        27     603
    
    The lower the interest rate the smoother the payments are over the term(ie 0% they are are capital)

    Overpayments should all go to capital allthough it has been know for some lenders to store them this practivce should no longer happen.
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