overpayment query

Savingup

Hi
New to this started to make overpayment to my nationwide repayment mortgage, have been in the past but have started again.

How are overpayments seen do they go straight off the amount or is there a element of interest and capital as with the mortgage payment?

I thought the overpayment came straight off the total outstanding?

Does it matter when the overpayment is made at the same day as the mortgage payment or after the mortgage payment.

Balance October 2013 £29052
Nov morg £275.68
Nov ovpay £100
Balance £28711.91

Balance December 2013 £28711.91
Dec morg £275.68
Dec ovpay £100
Balance £28391.10

Rate 2.5% 10 years left to go
Asked for repayments to stay the same

Thanks

Savingup

sorry reposted in the correct forum mfws

[Deleted User]

Any overpayment comes straight off the capital.

Thrugelmir

Interest is calculated on a daily basis. So the earlier a payment is made the better.

Over a period of time. The interest saving will snowball.

jimjames

Thrugelmir wrote: »

Interest is calculated on a daily basis. So the earlier a payment is made the better.

Over a period of time. The interest saving will snowball.

It certainly does. We've overpaid for a number of years and the capital is now coming down rapidly as monthly payments are taking more capital out each time.

Nationwide have just implemented a (long requested) update to their internet banking so that it now shows the overpayment balance which makes it much easier to track how much over you are. Previously you had to wait for the end of year statement or call them up to see it.

Savingup

If the overpayment comes off the outstanding it only seems £88 out of the £100 overpayment comes off the outstanding when I make mine a couple days after the standard mortgage payment.
Is that correct?

Imma_Number

Interest is added daily but the daily amount is recalculated when a) the balance changes through regular payment or overpayment, b) additional drawdown, c) 1st Jan & d) when the interest rate changes.

If you check your balance every day you will see it change by the daily amount. When you make an over payment you see the balance change by the overpayment minus the daily interest and subsequent days the daily interest will be lower.

I've been doing this pretty much every day on my Nationwide since 2003.

Savingup

Thats the bit thats confusing
Overpaying to reduce the term or overpaying to reduce the monthly amount which is better in the long run?
A .If paying to reduce the monthly amount does the whole overpayment go directly to reduce the amount outstanding?

B. Over paying to reduce the term is part of the overpayment go toward the interest and part to capital repayment?

So if a lump sum of £1000 was paid on option b will that all go to reducing the amount in option b?

Spoke to nationwide still a bit confused they say I am reducing the term then say the overpayments do come off the outstanding amount but dont explain why all the overpayment doesnt pay off the capital ie what is interest and capital paid monthly.