Natwest mortgage renewal with £100 cashback

laurenf_2

Hi All

I am due to renew my mortgage deal and my current mortgage provider, Natwest, has offered me £100 cashback if I change to a new deal with them online. The only downside to this is that I have to keep my mortgage term the same, but I was wanting to reduce my term by increasing my monthly payments (I would be able to reduce my mortgage from 25 years to 18 years).
I was thinking, to get around this and to get the £100 cashback, I would accept their 25 year mortgage deal, but overpay my mortgage each month to the amount I was wanting to pay (Natwest allow me to overpay 10% of the amount owed each year).
But I am not too familiar with mortgage interest calculations.... I am wondering if this would work out the same way as getting a new deal with a reduced term?

I assume overpaying my mortgage would effectively reduce my term in the same way as getting a deal with a reduced term from the start, but I don't want to shoot myself in the foot for the sake of £100.

Hope this makes sense! Any advice would be appreciated

Yorkie1

Yes, that would work as long as you don't breach any overpayment limits.

laurenf_2

Thank you for your reply! One last question, if i did overpay my mortgage each month, do the banks recalculate the monthly payments to keep the term the same?

i.e. I pay £500 per month and have 24 years and 10 months left on a mortgage and I overpay my mortgage one month.... would the bank recalculate my next monthly payment to £480 per month so that i have 24 years and 9 months left?

I don't want to have to keep changing my payment.

Yorkie1

I'm just having issues with that on my overpayments (because I've overpaid within the limits but by more than a certain amount per month) so am not the best person to answer that one!!

You could have a look on the bank's website to see what they say about how they treat overpayments - you may have a choice.

Farmerbob

As Yorkie said the first senario would work fine.

Natwest will give you the choice to reduce the term or the MI. I'm not sure if you chose to reduce the MI how often they would recalculate your payment but it's unlikely they will do it every month they may either do it annually or recalculate the payment when your deal ends? You'd need to check with them.

I'm due to renew my RBS mortgage next week online to get the £100. I'm intending of keeping my payments the same as I'm paying now to reduce the term. If you speak to them before me come back with what they say in case this crops up again!

laurenf_2

Farmerbob wrote: »

As Yorkie said the first senario would work fine.

Natwest will give you the choice to reduce the term or the MI. I'm not sure if you chose to reduce the MI how often they would recalculate your payment but it's unlikely they will do it every month they may either do it annually or recalculate the payment when your deal ends? You'd need to check with them.

I'm due to renew my RBS mortgage next week online to get the £100. I'm intending of keeping my payments the same as I'm paying now to reduce the term. If you speak to them before me come back with what they say in case this crops up again!

Well I phoned Natwest today. They said to get the £100 cashback, the mortgage deal has to be changed online. However, I can phone up after applying online and change my term over the phone. This will cost £35 to do. I'd rather do this than go through the over payments route as i'm unsure how it'll implicate me overall.

Thanks for your help guys