Which option for mortgage overpayment?

laap

Dear members,

As savings rates are paltry, I'm thinking I should start making over payments on my Nationwide mortgage account.


If I over pay by £500+ the 2 different options are, and I quote from Nationwide's website:-

"Your overpayment will automatically reduce your monthly payment.

Alternatively, you can choose to keep your monthly payment the same and reduce your term instead.
If you would like to reduce your term, please let us know when you make your overpayment".

As I don't understand the pros and cons of each option. I cannot decide which one is best!

If anyone can enlighten me I'd really appreciate an explanation of the 2 options.

Many thanks!

opinions4u

What rate are you paying?

Reducing the term would be my preferred route.

Thrugelmir

Do you want to maintain your regular payment and overpay an amount as well?

Or make an overpayment and pay less as a regular amount.

To repay your mortgage the quickest, select the first option above.

laap

Thrugelmir wrote: »

Do you want to maintain your regular payment and overpay an amount as well?

Or make an overpayment and pay less as a regular amount.

To repay your mortgage the quickest, select the first option above.

Thanks for your prompt advice.
I'm looking to pay off the mortgage earlier so I should still pay the normal monthly amount plus whatever I can afford on top.

Another concern is should, I for any reason need the money back would they return it to me?

Gary_zero

If you are looking to pay the mortgage offf earlier then you want to reduce the term. Tell Nationwide this and they will adjust your account accordingly. If you want the overpayments back at a later date you can take a payment holiday up to the overpaid amount.

droiderm

Why can't you keep the term the same and over pay what you would if you had of reduced the term ?
This way you commitment reduces. May come in handy if anything unexpected happens

Gary_zero

Nationwide don't actually reduce the term. Your term date would stay the same but the mortgage would be paid up x years or months prior to that date meaning no more payments

Jonbvn

When we did this, we decided to reduce the monthly payments. We decided to do this since it offered the most flexibility. I.e. If our circumstances changed we would have lower monthly payments. BTW, mortgage is now toast:j

Unless you have an offset mortgage, you are unlikely to be able to recover overpayments. However, check with your lender on this point, as T&C's do vary.

latecomer

There are some mortgages that allow overpayments to be withdrawn - the Co-op allow you to either use overpayments to pay off the outstanding capital or put payments into an overpayment fund which acts like an offset account and these can be withdrawn.

HelenDaveKids

My old nationwide morgage allowed to borrow back money op'd but my current NW morgage doesn't. So def need to check terms and conditions.