Mortgage overpayment question

lagi

Can't quite work this out if anybody could give me a definitive answer.

I am currently overpaying and continuing to pay the same amount.

Just recently as i have moved onto Nationwides bmr there is no limit to overpayment amounts.

To put it simply for calculation purposes,

If my current payment was £500 and i paid £1000 every month, would my monthly payment decrease every month and that would mean i would overpay a little more each month?

funscott

Im with YBS on a offset / tracker. the way mine works is this.

my monthly amount due is worked out anually. (every janaury) so the interest rate is effectivly fixed for 12 months but the interest is calculated daily (depending what i have offset etc).

I have the option of overpaying (as much as i like) and this can either reduce next years payments but keeping the same term of the orginal mortgage (25 years) or what i opted for was to reduce the term (should do it in 11 years). my way i save on interest but if my situation changes i can have payment holidays on the money i have overpaid.

as its an offset i dont really need to overpay i could just put it in my saving account to do the same job but i cant be trusted so prefer to overpay so i dont have access to it. i dont miss it as this is the same about i was paying when ifirst took it out (@5.7%) now paying 1.25% happy days

dimbo61

Hi Funscott,
I also have an offset mortgage with YBS but mine has a 3% collar so paying 3.75%.
The op might be better off to build up savings in cash ISA,s first ( upto £16K ) paying 3% plus rather than overpay.

lagi

My monthly amount is worked out monthly so just need to know will i overpay a little more each month if overpayment is the same?

Froggitt

YBS above have three options for overpayments/offset credits which makes it somewhat confusing. Overpayments can either

- lead to lower monthly cost next year
- lead to reduced mortgage term
- something else cant remember what!!!

Presumably NW will have similar options.

miniemma

lagi


I am with Nationwide and have been overpaying whilst on a fixed mortgage. If I overpaid by the max amount of £500 (without penalty) then they sent me a letter saying my monthly payments were reduced. If I overpaid by less than £500 then there was no change to the monthly payment.


I am not sure what will happen to payments when not in a fix as there is no maximum non penalty overpayment but I would be interested to find out as we are about to finish our fix and move to bmr.


Incidentally, we have always been able to make an appointment in our branch to have a meeting with an advisor about our mortgage and other investments. They have now stopped this This is a real shame as it was great to have a face to face chat with the paperwork there in front of us all, made it all easier to understand.

lagi

From what i have read online and received as paperwork from NW they calculate theirs monthly while others only change it yearly or should rates change.

If you are moving onto their bmr which i have done as this is still by far the best deal for me as you can overpay as much as you like. This helps if you wanted to pay more than the £500 previously allowed amount.

I have had a letter saying my payments have dropped and contacted them by phone to say i wish to continue overpaying. As i have only received the one statement so far was interested to see in anybody knew before the next one came whether i would pay a little more each month if i continue.

If nobody knows i will be able to confirm it soon when i get my second statement.

lagi

Update: But not what i was expecting, if somebody could confirm this is correct.

I have had 3 statements now, it seems my overpayment increases by the same amount each time and the monthly payment decreases the same amount each time.

I thought it would be more of a ladder effect, as the overpayment increases each month i thought it would show more.

At the moment its only going down £3 per month, so at that rate still quite a few years left.