Overpayments on a Nationwide mortgage. Reduction in term?

KTF

A friend at work has a Nationwide mortgage and is overpaying on it like myself but they say that they get a letter every month saying that the overall term has been reduced as a result of the overpayment.

I have never had such a letter and on the online banking and recent mortgage statement the original redemption date is still showing.

I have been overpaying for over a year now and an concerned that this has not been taken into account on my term.

Is anyone else with Nationwide overpaying and getting a similar letter as I feel that I am missing out on something here and could potentially be costing me money.

susieb

Not sure if I can help, but I have just started overpaying on a fixed rate, and wrote to them to tell them I wanted the term reduced not the payments and got a letter back by return advising me they would reduce the term.

KTF

Can you explain the difference to me because I am paying the same amount each month and if the number of payments was reduced then wouldn't the overall term be as well (because eventually you would run out of mortgage to pay off before the end of the actual term)?

alanobrien

Yes i overpay monthly and i get a letter every month telling me the mortgage term has reduced. Its a waste of paper really, i have told them to stop sending them as i can see the term reducing online but i still get them.

If you cannot see your term reducing in your online account try using the secure email to contact them and find out what is going on.

Could be they are reducing your monthly payment rather than the term of the mortgage ?

KTF

I sent them a msg today and will wait and see what they say. I was never offered the option so just what difference (if any) it would make.

tt07

When I first overpayed £500 I got a letter, this can be stopped if you call them. I asked them to keep the repayment the same and now when I overpay £500 I don't get a letter pay under £500 you won't get a letter.

Robert_Sterling

When you start to overpay your mortgage you can state whether you wish the money to be used to shorten the duration of the mortgage or to reduce subsequent monthly repayments.

KTF

I wasnt offered that option. All they did was send me through the details for the standing order. I still pay the same each month so is it being taken off the duration by default?

alanobrien

KTF wrote:

I wasnt offered that option. All they did was send me through the details for the standing order. I still pay the same each month so is it being taken off the duration by default?

If your repayments have not changed then they must be reducing the duration of the mortgage.

KTF

It took a while but I have had a reply back from them:

Thank you for your message.

You only have the option of reducing your term if you overpay by more than £500 per month.

If you do not, this option is not available to you.

When you make an overpayment of £500.00 or over, we will automatically amend the monthly payment. You will need to let me know if you'd like a preference set to amend the term instead.

Regards,

So it seems that they only reduce the term if you overpay by £500 a month which seems odd because that will then attract the early repayment charge (I have a 2 year fixed mortgage).

I dont overpay by that much so it just gets taken off the capital as usual. I guess I will just reduce the term down when I remortgage in October as I was planning to do anyway.

old_git_6

Hi,

I think you'll find that your montly repayments will be recalculated to take into account your overpayment at the next change of rates (if you have a fixed rate then I'm not sure how it works).

I overpay (by £200 a month) and at the last but one change in rate found that my monthly repayment actually went down!