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Mortgage over payments
Colinthefish
Posts: 14 Forumite
Just checking this is right
I have a mortgage with nationwide fixed 5 year @ 5.7% and just coming to the end, I have made over payments of £6700. My rate goes down to 2.5%. I want to take the money out . Now I know I get the £6700 but will I have got interest on it .
I have a mortgage with nationwide fixed 5 year @ 5.7% and just coming to the end, I have made over payments of £6700. My rate goes down to 2.5%. I want to take the money out . Now I know I get the £6700 but will I have got interest on it .
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Comments
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No.
Its not a savings account, but you will have saved money in that they havent charged you interest on that money.
Gary.0 -
Got that, how is that worked out ? Is it calculated every month ?0
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Are you talking about Over payments, or payments into an offset account?
As far as I understand, once you make an Over payment, you can't later decide to take it back!November 2016: Mortgage = £185,0000 -
If it's a non-offset account, the T&Cs of the mortgage will state whether overpayments can be reclaimed. But even if they are, technically, permitted, many mortgage products still allow the lender to say no. In other words, the reclaim is at the lender's discretion.0
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Colinthefish wrote: »Got that, how is that worked out ? Is it calculated every month ?
Sort of. Because you have overpaid the balance is less therefore when the bank adds the interest charge it is less since the balance is less.
Therefore you save money by paying less interest but unless it is an offset mortgage then you don't see the overpayments separately, just the reduced balance.
I believe Nationwide are one of the few lenders that allow you to withdraw overpayments later on.
Gary.0 -
Yep. If looking to port BMR to a new property, you are advised to redraw any overpayments before completion so you get more of the new mortgage on the lower rate.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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FlashBarry wrote: »Are you talking about Over payments, or payments into an offset account?
As far as I understand, once you make an Over payment, you can't later decide to take it back!
Some lenders do allow you to take it back. Effectively it is a savings account in the way that you're not earning interest on the money banked but you're saving on some compound interest. This way people can overpay without needing an emergency fund in addition to overpayments (there is still a risk if the lender changes its terms).
No you will not gain interest on the money overpaid and reclaimed.MFW - <£90kAll other debts cleared thanks to the knowledge gained from this wonderful website and its users!0
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