NWide overpayments

Yorkie1

I've just started a new 5 year fix with N'Wide and made my first overpayment this month, of £650.

They've sent me a letter saying they've reduced my term to 20 years and 7 months (it was 21 years); my monthly repayments will remain at the fixed amount set when the fix started.

Could this reduction in term have any impact on me down the line? e.g. at the end of the fix, could I have less time to repay the outstanding balance and thus higher monthly payments than if the term had not been reduced?

If I continue at this rate of o/p, my mortgage balance at the end of the 5 years will have gone down from about £101K to about £42K or so. I'd like the luxury of knowing I have 17 years to pay off that £42K - and so have the luxury of changing jobs to lower pay if desired - rather than whatever short term NW have reduced it to by then.

Is there an alternative to N'Wide's actions? Can I achieve what I want within N'Wide's T&Cs?

Thrugelmir

Your monthly payments are being maintained at the same level. So the only way your payments will increase would be as the result of higher interest rates.

Just make sure that you've an emergency savings pot to call on. Rather than using all your excess funds to overpay the mortgage.

TrickyDicky101

Hi Yorkie

One of the options that NW offered me was to maintain payments at their fixed size (after overpayment) until the interest rate changed (ie at end of fix) but without reduction in the term. I was able to select this via their online banking - maybe you will be able to do so too?

Morgage_Confused

You really dont want them reducing the term each time you overpay. Keep the term the same. Also ask them to keep your payments the same too. This will give you maximum flexibility in the future.

kingstreet

As you are no longer allowed to "re-draw" overpayments, you will usually have to choose to reduce the term, or reduce the future monthly payments when you overpay.

Ask the lender for its procedure...

Yorkie1

Thanks all.

If I opt to reduce future monthly payments, would that reduce the payments during the fix, or just after the end of the fix?

TrickyDicky101

With NW I had the option to do either: reduce payments straight away or only after the interest rate changed (in other words when the fix had ended).

Yorkie1

Ah, OK. I'll pop into branch if I can't resolve it online over the weekend. Much appreciated. I'd like to reduce payments at the end of the fix, rather than shorten the mortgage.