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Nationwide Overpayment reserve?
golly99
Posts: 454 Forumite
Hi
Quick question, i'm currently with Nationwide on one of their fixed products, where you can overpay £500 each month. Done this for a while now and notice it seems to go in a pot as an overpayment reserve. Presumably this gets knocked over the overall mortgage amount? Think it's approx about £6k ish.
Cheers
Quick question, i'm currently with Nationwide on one of their fixed products, where you can overpay £500 each month. Done this for a while now and notice it seems to go in a pot as an overpayment reserve. Presumably this gets knocked over the overall mortgage amount? Think it's approx about £6k ish.
Cheers
0
Comments
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Hi
Quick question, i'm currently with Nationwide on one of their fixed products, where you can overpay £500 each month. Done this for a while now and notice it seems to go in a pot as an overpayment reserve. Presumably this gets knocked over the overall mortgage amount? Think it's approx about £6k ish.
Cheers
Anyone got any ideas on this?
Cheers0 -
The overpayments effectively reduce the capital by the amount you overpay.
Hence you only then pay intrest on the capital balance - (minus the) Overpayment Reserve.
Well worth doing, even if you can only afford to over pay £10 a month!0 -
So if say the overpayment reserve was £5k and then taken away, it would mean I would owe £5k more on my mortgage? Just a bit confusing the way it's setup!0
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I think its done like this so you can see the overpayment. 1 big reason is because you can only borrow back what you've overpayed
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So if say the overpayment reserve was £5k and then taken away, it would mean I would owe £5k more on my mortgage? Just a bit confusing the way it's setup!
Basically, if you take away the overpayment of £5K then the capital you would then pay intrest on would increase by that amount. So if your capital balance was £20K thanks to your £5K overpayment you would only be paying intrest on the £20K. If you remove the £5K overpayment element, you would pay intrest in the true level of capital outstanding which would be £25K.
Any overpayment you make just reduces the Capital element that the intrest payment is calculated against. So if you remove your overpayment not only would the balance of capital effectively increase, so would the level of intrest on this new larger sum outstanding.
Hope that helps, Andy.0 -
Yes, thanks, I now understand! Overpaying is definitely the way to go!0
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