Can anyone help??????

Lizzybop

We currently have 3 mortgage accounts with Nationwide and are trying to make overpayments as often as possible.

We recently took back a little bit of our overpayment reserve due to some work needing doing on the house but situation is currently:

Acct#1 - redemption Oct 2028
Acct#2 - redemption Mar 2029
Acct#3 - redemption Nov 2022

Original repayment date was Nov 2029.

Was reading some info from Nationwide today and am not sure if I have understood it correctly - wondered if anyone can help.

With situation as above one of the accounts is due to be paid off way before the other 2, but what I read seemed to suggest that all accounts have to be paid off at the same time.

What we had hoped to do was overpay more on just one of the accounts and get it paid off quicker - then turn our attentions to the other ones.

Does anyone have any knowledge of Nationwide mortgages? Can you clarify????

Much appreciate any advice

Thanks
x

dimbo61

You need to check with NW but you can pay off one part before the other two and try to overpay the part with the highest rate first and once you have paid your £500 ( each month )off that then the second most expensive.
If all 3 parts are the same rate then I would try to clear the one with the smallest balance

financialbliss

Can anyone help ? Yes - if you give us some info. Such as:

• What are the interest rates on each chunk?
• Are you on fixed or SVR for each account?
• Do you have any redemption penalties?
• and if you're happy to disclose, the balance for each.

That will give us a fair indication of your mortgage products and we will be able to guide you as to which would be better to overpay / clear first.

But as dimbo61 said, normally you pay the higher interest rate off first as this saves you more money in the long term. Also if you have credit card debt, you should tackle that before turning your attention to the mortgage.

Financial Bliss.

Lizzybop

Thanks to Dimbo & Financialbliss.

I'll try and answer your questions

All 3 accounts are on the same variable rate (currently 2.5%) guaranteed to be no more than 2% above base rates. This came down from a fixed rate of 5.59% so we use the extra that we used to pay to overpay each month, although we have been concentrating on the account with the smallest balance.

Acct#1 £30k approx - have overpaid £500
Acct#2 £44k approx - have overpaid £500
Acct#3 £10k approx - have overpaid £5000

We can overpay as much as we like each month without penalty and have no early repayment charges or redemption admin fees.

Also we have no credit card debt. I've never paid interest on a credit card my whole life, I've also never been overdrawn. I'm very proud of this

The part I read in the Nationwide Terms & Conditions was

'Total amount to repay: This is the amount required to close this account in full at the date shown. However if you have more than one account and wish to close your main loan then all additional borrowing must be repaid at the same time'

This suggested to me that if we were going to pay off one of the accounts then we had to pay off all of them. Acct#1 was the original mortgage (good grief remember when you could buy a house for less than £40k!!!!!). The other accounts were additional lending when we moved house (twice over a number of years) and had to increase the mortgage. Unfortunately had to put term back to 25 years both times.

My concern is that we are overpaying on the smallest account, but that we won't be allowed to pay this off on it's own without paying off the other two.

Appreciate your comments

Ta
x

financialbliss

Hi Lizzybop,

Ah - Nationwide standard variable rate (SRV) - one of the lowest around and apparently it's costing them millions due to their low rate - other SRVs are around the 4% or 5% mark.

As you're on their SVR (I drop from my Nationwide fixed rate onto their SVR in March 2011), you can overpay by any amount without penalty.

As all 3 are on the same rate, there's no benefit from paying one off sooner than the other. So account '1' was your main mortgage account and '2' and '3' were additional lending.

I'd ignore accounts '1' and '2' completely and clear account '3' in full. Once that is cleared, I'd concentrate on account '2' and clear this too. Once '2' is cleared, repay your original account.

My reasoning - if you pay '1' off first, I suspect you would be asked to clear the additional lending - '2' and '3' too. Just my opinion and I'm sure others will come in with a different plan.

If you can, make the best of the low rates, as they won't stay low that much longer.

Financial Bliss.

Fang_3

Could you not pay one down to about £1000, then the next, and then the next, and then pay them all off at once? Would that be a way around it?

Lizzybop

Thanks Financialbliss and Fang

Will get busy with trying to overpay as much as poss on the smallest account.

Great idea about paying down to about £1k each if paying off at different times is a problem.

Good luck to all other MFWs :j

dimbo61

You should be able to get close to 3% from a cash ISA,s so try to build up savings in ISA,s till you get £16K saved then OP the mortgage and good luck

Lizzybop

That's a fab idea, thanks Dimbo.

I know I don't use our ISA allowances effectively.

There never seems to be enough money for all the things you know you should be doing. I guess that's possibly one of the reasons that we're all trying to lose the mortgage payments each month.