Overpayment Q - Nationwide

Albert2

Hi,

Hope someone can advise, I did try a search, but .....

Anyway, we managed to make an overpayment on our mortgage last month (within the limit so as not to incur a charge).

After several discussions they eventually understood that we were making overpayments to reduce the term.

Now we are being told that only overpayments of £500 will reduce the term immediately, any other overpayments will be totalled up and term reduced annually.

Question(s) I have are :

1/ Does this explanation make sense ?
2/ Would we be better saving up our overpayments to total £500 before handing over to Nationwide or better to drip-feed it to them as we can afford ?

Apologies in advance if these are either daft (no such thing as a daft question ...?) or have been covered elsewhere.

Thanks in advance.

Woby_Tide

it's more an administrative issue than anything else. Depending on the size of the mortgage, not every overpayment may 'knock' a month of the term so it's often not worth teh effort for them to amend the term and advise you each month.In reality, you gain nor lose anything by them only calculating the new term each year (unless you required to remortgage elsewhere and need an idea of the length of term you want), your payments will always stay the same regardless. Our online term remaining figure only used to update once a year when we were overpaying.

As per q2, as Nationwide use daily interest the sooner they get the overpayment technically the sonneryou receive benefit(unless you could save the money more efficiently eslewhere to outweigh the interest.