Nationwide - overpay now or later

wooders

Hi

Quickie I hope

I'm with Nationwide fixed rate till Sept 2012 at 5.8% £80000 owed on a £220000 home, 14yrs to go. No debts and a bit in my isa's

Q is, i currently have enough cushion to allow me to overpay upto £500 per month for about a year,

should I start now???
or
wait until Sept 2012 when I'll move to another fixed rate that (at the moment) will be less eg Nationwide 5yrs is 4.4%.

I know I could probably get a better rate through trackers etc but with 2 small kids I like to have the security of knowing what I'm paying per month. ( Unless someone can explain the Barclays advert atmo?? )

any advice / ideas. Thnakyou :T

Thrugelmir

You won't be able to earn a guaranteed return of 5.8% elsewhere. So pay the mortgage down straight away and save paying interest.

September 2012 is too far ahead to consider options now.

wooders

Thrugelmir wrote: »

You won't be able to earn a guaranteed return of 5.8% elsewhere. So pay the mortgage down straight away and save paying interest.

September 2012 is too far ahead to consider options now.

why?

wouldnt i get a deal better that 5.8%??? loads of fixed deals atmo less than this.

and sep 2012 is only a yr and 4 months away!! so planning now. :T
cheers buddy

beecher2

wooders wrote: »

why?

wouldnt i get a deal better that 5.8%??? loads of fixed deals atmo less than this.

and sep 2012 is only a yr and 4 months away!! so planning now. :T
cheers buddy

You won't get better than 5.8% in savings accounts, so it makes sense to overpay now, rather than save. Just check how much you're allowed to overpay without being penalised.

Thrugelmir

wooders wrote: »

wouldnt i get a deal better that 5.8%??? loads of fixed deals atmo less than this.

Too far ahead to reserve the product.

Also factor in product fees and the follow on interest rate on the new product.

Your mortgage balance is fairly low so the impact of product fees can be high.

You will default onto NW's guaranteed 2% above BOE base rate SVR. May be worth staying on this rate.

madmish00

Looking at the overpayment calculator - paying an extra £500 for 18mths would take you mortgage down to in the region of £65k by Sep 2012.

I don't think you will find a savings account that will turn £9000 into £15000 over 18mths! Overpay now!

dimbo61

So if you have the spare cash why not overpay the £500 a month allowed until your fix is up and this time next year have a look at what is available on the mortgage market then !
Your mortgage will be over £6000 less PLUS interest saved at 5.8% ( tax free)
You will have had time to see if you can afford the new monthly mortgage payment each and every month and could then reduce the mortgage term and repay the debt quicker ( saving even more interest)
You have a LTV of less than 40% now so have the pick of the market but as Thurgelmir has said you may well revert to the Nationwide SVR of 2% above base and thats a good rate

wooders

thanks gang, made my 1st £500 overpayment today, intend to do this for a year

thriftychap_2

overpay, overpay, overpay!
Good luck.

B'stard

wooders wrote: »

thanks gang, made my 1st £500 overpayment today, intend to do this for a year

You will receive, like I do, a letter each month that you overpay by £500 telling you the new term for your mortgage.
If you pay less than £500 they do not send out a letter.

wooders

B'stard wrote: »

You will receive, like I do, a letter each month that you overpay by £500 telling you the new term for your mortgage.
If you pay less than £500 they do not send out a letter.

Bstard

do you see these letters as good news!!??!! :j

I've read a little on here that the overpayments can be used to;

a) reduce interest
b) shorten mortgage term
c) bit of both

My motivation is easy really, I retire in 14 yrs at 50 yrs old ( decent pension), My kids will be 21 and 18 ie prime expensive kids if they elect to go to uni etc :eek: etc so would like to be mortgage free a few years earlier than this but without using all of my savings.

If I could afford £500 pm over pay every year I'd be done in 6yrs :T, but realistically I'm looking at 12k max over 2yrs but thought I'd have a go for a yr at least, this reduces it by 2yrs.

good luck and thanks for the info