Beware of a Catch with Overpayments on Nationwide Mortgages

Ystrad_Lad

ab7167, when I spoke to them yesterday they were quite categorical that my overpayment of £499 couldn't be used to reduce the term. It had to be exactly £500 which is what it said in the letter they sent me.

Are there different rules for different Nationwide mortgages? Mine's a 3 year fixed rate which I started in July of this year.

alanobrien

Ystrad_Lad wrote:

I've just fallen foul of a rule on overpayments which I've never heard of before.

Unless the overpayment is £500 or more, it cannot be used to reduce the term of the mortgage. I have a fixed rate motgage and I cannot pay more than £500 without incurring a penalty. So in other words, I have to overpay exactly £500 per month in order to reduce the term.

Before making any payments I called in to my local Nationwide branch to check the rules and this wasn't mentioned. I have not seen it written anywhere and, until I got a letter from Nationwide this week, I'd never heard of it.

Has anyone else come across this before?

No this is a new one on me.
My mortgage is a 5 year fixed rate. I started overpaying 100 quid a month then built it up and it has always reduced the duration of the mortgage.
How do i know this ? Well nationwide insist on sending me a letter every month telling me the mortgage completion date has changed (moved back

Sounds like its a new condition on recent mortgages ? If so its very sneaky

financialbliss

I'm with Nationwide too - wasn't aware of this. I altered mortgage earlier this year to stop reducing monthly DD payment and start reducing term instead - just flicked thru correspondence - in a letter dated 30th August...

"Thanks for overpayment of 500... I have amened your account so that any future payments (of £500 or more) will automatically reduce the term."

I've also received a letter this week (another 500 overpayment on 1st December) indicating new mortgage term of 16 years 08 months!

Starting this month, I've upped my standard monthly payment back to approx. original amount - previous over payments used to reduce monthly payment, from ~ 485 back to 540 pm - which should also help reduce mortgage a bit more aggressively...

As others have mentioned, any overpayment is going to help reduce daily interest, which will help towards reducing term.

elantan

does this make any difference with fixed rate mortgages? think i need to phone the nationwide come monday

UK007BullDog

I also have my mortgage with Nationwide and half way through a 5 year fixed term. I overpay my mortgage payments regularily as I set up a seperate payment of £80 per month.

I have never received a seperate statement to the one I get once a year and it has shown that so far I have knocked off quite a few years from my mortgage term.

alanobrien

wotsthat wrote:

Nationwide don't change the contractual final payment date - I suppose it would be a pain to do this everytime anyone made an overpayment and overpayers with the Nationwide have the opportunity to reclaim overpayments.

They do with my fixed rate. (2 yrs into a 5 yr fix) I have a DD monthly overpayment and i get a letter from them every month letting me know the final payment date has moved to X. And yes i have a fully flexible mortgage and can reclaim over payments if necessary.

Bizarre though it is given i can see it all online anyway.

AceCobra

I'll be intrested to see what happens next month when I'll be finished year 1 of my NW 2 year fixed deal. We overpay by £200 each month and I can see it come off the capital but the completion date never changes. I assumed it would change after the first yearly statement?

Martin.

ab7167

Mine are both 2 year fixes, one started in July 2006, one in November 2006.

I have never received letters from Nationwide when I have overpayed, and the amount called for in the DD has always remained the same - therefore automatically reducing the term I thought?

Am I wrong on this?

Ali

barginpleasure

I have a 5 year fixed term with Nationwide and pay £400 per month until the term ends.

Why would I put £500 into my mortgage to reduce the amount but I still have to pay £400 on the outstanding.

Would it not be better to save the £500 a month and earn interst on it then at the end of the 5 years add this to bring the amount down for the re-mortgage.

See number 4 below :- The overpayment will be taken into account the next time your interest rate changes.
My rate will change after the 5 years is up!!

barginpleasure

1. WHAT ARE THE BENEFITS OF MAKING MORTGAGE/FLEXIBLE ADVANCE OVERPAYMENTS?
You can overpay on most accounts and this will pay off your Mortgage/Flexible Advance more quickly and save you money. Any overpayments will reduce your interest straight away and create a "reserve" that you can borrow from if and when you need to. What's more there is no charge for this service.

2. WILL I BE CHARGED AN EARLY REPAYMENT FEE?
You can overpay up to £500 per month per Mortgage/Flexible Advance without penalty on many of our Fixed Rate and Tracker Mortgages. You'll need to check your own mortgage conditions to see if this is allowed on your account and if there are any limitations. These overpayments are per calendar month, if you miss a month you cannot double up on the next months overpayment. You can make an overpayment on each of your Mortgage/Flexible Advances as per their terms & conditions.

3. I'VE MADE AN OVERPAYMENT OF £500 OR MORE - WHAT HAPPENS?
If you make an overpayment of £500.00 or more in any one calendar month, we'll reduce your next monthly payment. If you wish to keep your payments the same and reduce your term instead (subject to your account type) please inform us by logging onto our online banking service and sending a secure message.

4. I'VE MADE AN OVERPAYMENT OF LESS THAN £500.00 - WHAT HAPPENS?
Overpayments of less than £500 won't change your monthly payment straight away, but will reduce the interest charged. The overpayment will be taken into account the next time your interest rate changes.

5. HOW CAN I MAKE AN OVERPAYMENT ON MY MORTGAGE/FLEXIBLE ADVANCE?
The easiest way for you to make an overpayment is through the 'Payments and Transfers' option using our online bank. Otherwise you can pay by cash or cheque at any of our branches. To make an electronic payment to your Mortgage/ Flexible Advance, please use the following details (You can also use these details to make payments/overpayments to your mortgage from a non Nationwide account):

- The Pay Sort Code
- The Pay Account Number
- The Pay Reference Number is the account number of your Mortgage/Flexible Advance. You can find this either on your Mortgage Year End statement (displayed on the top left hand side) or on your Notice Of Mortgage Rate change letter (displayed within the 'Payment Details' box at the bottom of the page). Your account number must be quoted in the correct format as it appears on your statement, including any spaces or dashes.

Payments made using the 'Payments and Transfer' facility which normally take up to 2 working days to arrive. The maximum amount you can send via the payment facility is £10,000, though you can make multiple payments if you wish to send larger amounts.

6. BORROWING BACK FROM YOUR MORTGAGE/FLEXIBLE OVERPAYMENT RESERVE:
If you've a sole account and already overpaid and want to borrow money from your reserve, please send a written signed request to the Customer Service Team at the following address: Nationwide, Kings Park Road, Moulton Park, Northampton, NN3 6NW. If you pay by direct debit and the amount is less than your monthly payment, we'll refund you the overpayment back to the account it came from within three to five days. Otherwise, we'll refund it by cheque.

If you've a joint mortgage and want a refund of £500.00, or an amount more than your monthly payment, please send a written request signed by all parties named on the mortgage to the Customer Service Team at the following address: Nationwide, Kings Park Road, Moulton Park, Northampton, NN3 6NW

If you've had an overpayment refund, the balance of your mortgage will go up by the amount you've borrowed back. Interest will be charged on the higher balance, which will be reflected in future monthly mortgage payments