Nationwide overpayment options

Elfbert

Hi all,

I have a mortgage with Nationwide, and am in a position to overpay on it.

However, they offer three options for how this overpayment impacts on the mortgage:

-Pay off my mortgage earlier by reducing my mortgage term

-Reduce my future monthly payments

-Keep my existing payment and term as-is. (At the next natural mortgage payment change, i.e. interest rate change, my payment will be automatically recalculated).

I am wary of reducing my mortgage term, as I imagine it's harder to extend it again, if I were to port my mortgage or re-mortgage in the future? Can anyone tell me if I'm correct?

And I don't want to reduce my future payments - I want to pay more!

So am I correct in thinking the bottom option is the right one for me? Wait until my fix is over (in just under 2 years) and then see what my life plans at that time are and decide what to do? I may well want to buy a bigger place sometime around then.

The amount the interest is charged on drops from the next day whichever option is selected.

Any advice gratefully received!

Imma_Number

The bottom one. 100%.

It's what I did for many years.

Elfbert

Thanks! It feels like it should be a really simple question that I know the answer to - but I've never had enough cash to overpay before, and don't want to shoot myself in the foot when I'm trying to help my future self

Imma_Number

Ensure you have a savings pot too as getting overpayments out of the mortgage is harder than before.

Elfbert

I will

I don't think I can get my overpayments back - or at least, it's certainly not something you can easily do. I guess you could always talk to them if you really needed to.

But anyway, I'll make sure I keep some back. Just sorting out the best savings/ISAs etc now

MABLE

We are overpaying on our NW mortgage and it will be paid off in January 2015. However this was on fixed rate until September 2015 so there will be a small penalty to pay of about £200.


The original redemption was Feb 2027.

kingstreet

You can no longer re-draw overpayments with Nationwide, unless your mortgage account started before 4 march 2010.

http://www.nationwide-intermediary.co.uk/products/flexible_benefits/flexible_benefits_for_existing

If you port a Nationwide rate, you can choose any affordable mortgage term which takes you upto retirement. You do not have to take the residual term of your current mortgage.

If you remortgage, which is a new mortgage with a new lender to replace the old one, you can also choose any affordable mortgage term which takes you upto retirement.

If you return to Nationwide for a customer retention product when the current one ends, you will retain the residual term of your current mortgage.

In future, under the MMR regime, some lenders will carry out an affordability assessment for a change in the mortgage term. Establish what your lender's policy is on this.

Elfbert

Thanks, Kingstreet.

I am a long way off retirement, so it's good to know I can renegotiate if porting etc.