Can I pay a Chunk off of my mortgage?

cbfire999

I am looking at moving house in the next couple of months and to do this I will need to extend my mortgage by £60k which is not a problem and the building society have agreed to this. I would probably get this additional borrowing on a 2 year fixed and my mortgage is with the Nationwide. My question is can I pay a chunk from this within a couple of months of borrowing? I will be in a position to pay off £40k by then.

If this is not possible, is there a way of borrowing this extra £40k without massive interest rates and payments?

Yorkie1

If it's a 2 year fix then I would imagine there will be an early repayment charge if you overpay more than the permitted amount.

Your terms and conditions will tell you how much you can overpay. I'm just going through the application process with Nationwide and if I recall properly the T&C on my product are £500 max per month. Any more than that and the ERC (I think 4% of the borrowed amount) is payable.

I think you will need to work out a) how much the ERC will be, compared to how b) much you will save over the two years' tie-in by repaying that amount early (I assume no longer term tie-in from the existing product), and c) what you would get if you put the money in a savings account.

Do you already have 3-6 months' worth of expenditure in a rainy day fund in case you lose your job etc? Many people on here recommend that is a prudent thing to do before spending all that cash on the mortgage.

cbfire999

Thanks for your reply. At present I have not tied in to any rate and would look to do it in a couple of weeks. The main chunk of my mortgage is with the Nationwide and that will go on to the Standard variable rate from September so I guess I could pay it off of that instead? Just dont want to lose out on a property by having to wait until I have the extra cash!

Yorkie1

I'm afraid I don't know about the practicalities of paying off one part rather than the other - hopefully someone else will be along soon who can answer this bit!

dimbo61

Ring up and speak to some one at Nationwide but if you have 2 parts to your mortgage and one part is on the SVR and another part fixed then I would think you could pay a lump sum off the SVR part ( check with lender )
Just say I am due say £4/5,000 and will pay this off the SVR part is that ok !