Nationwide mortgage overpayment query

quanto2009

Hi
Been making overpayments to my mortgage for the last few years. currently on a fix year fix @5.6 ending 2013( fixed before all the boe rate dropped). Outstanding £34K ,Over payments approx £200 per month, made a overpayment of £500 last month which generated a letter that my monthly repayments would drop from now going forward.Spoke to nationwide that I wanted to keep the repayments the same to reduce the term, but I ring up a week later after being told a letter would be sent to confirm this, but told my payments will be the lower payment next month not the original and that my previous payments have not gone towards reducing the term but off the capital.
1. I was under the impression that the over payments went to reducing the term?
2. I have a over payment reserve of £10k 15 years left on the mortgage currently £337 or £289 after the £500 overpayment.
3. How do I get the overpayment reserve to go towards shortening the mortgage or will it do that as it is

Confused

originalmiscellany

When you overpay, you have 2 options normally:
Whether to:
a) Shorten the length of the mortgage but keep the amount you over pay the same

or
b) Keep the length of the mortgage the same but lower repayments per month.

It sounds to me that you have chosen the wrong one inadvertently.

All you should do is ring up and request the "right" option to speed up overpayment times.

Yorkie1

If you have internet access I *believe* you may be able to do this online too.

quanto2009

The overpayment to date of £10k can that be used to reduce the term now as they say from today any over payments will reduce the term that is whats confusing me?

elsien

I have generally found Nationwide pretty helpful in this respect - at various times I've either reduced the term or the capital and they've not had an issue with either.
Get back onto them and explain exactly what you want, possibly someone somewhere has misunderstood your request.

quanto2009

Saw a a Nationwide mortgage adviser this morning
Original mortgage £63000 in 2001 for 25 years
Outstanding £3477800
Overpayment £12056
4th year into 5 year fix ending feb 2013 @ 5.63
monthly payment now £289 was £337 after a overpayment of £500 in November 2010. I been making over payments each month of between £200 and £300 per month previously.
Time left 14 years 9 months
I have asked for the term be reduced and payments to stay the same for any over payments,speaking to the adviser was a waste of time as she said head office calculates the figures and would need to contact them to understand where I stand and the info would be in the next mortgage statement, I said the whole point of making the payments would be knock years not months of the mortgage.
The whole point of seeing the adviser was that when speaking to the call centre I could never get the answers to the question of why the over payments weren't reducing the term

Questions I have asked and if someone can clarify while I wait for some one to contact me from Nationwide.

1.Is the £12056 overpayment included in outstanding balance, I know I can take this back if needed?
2.With the amount of overpayment surely it would have knocked years not months of f the mortgage?
3. If I continued paying just £50 over payments every month going forward what would the term be reduced to?
4. Would it be better to make the overpayment annually rather than monthly as I have been doing?

Yorkie1

Q3. There is an overpayments calculator on the main part of the forum in the mortgages section (quick links right at the top of the page). You can input the different variables and find out how much impact it should have assuming all else remains constant.

Q4. As interest is calculated daily, make the overpayment sooner rather than later. Don't delay for the sake of it, unless you are getting a better rate of interest in the savings account.

quanto2009

Nationwide got back to me re the over payments, they have not includes all the over payments only the £500 that triggerd the letter hence why the term only reduce a couple months, they will backdate all the over payments made to datereduce the term which will brig the term to 11 years 6 months but will send a letter to confirm all this when they have calculated the yearly statement in Jan2012.
Does this sound correct as I thought the 12k overpayment would have knocked more than 3 years off?
Would I be better leaving the term as is and overpay and in time pay it off quicker or reduce the term?

Quanto

foreversummer

Don't worry. An overpayment is a overpayment and it will be equally beneficial whichever way you do it. You are not losing out. All you have to decide is whether it is better for your circumstances to reduce the term and therefore maintain your payments as they are, or reduce the payments giving you more flexibility by having a lower contractual payment going forward.

You really need to familiarize yourself with mortgage overpayment calculators. There are loads on the web and if you play around with your figures it should become more clear to you.

Foreversummer