Overpayments on Natwest mortgage

Tom_Spilsbury

Hello –

I'm just after a bit of advice about making overpayments on my mortgage.

As is common with many mortgages, I am allowed to make overpayments of up to 10% of the outstanding balance in each year. I took out a mortgage of £180,000 on 27 July 2014, so I assume I can make up to £18,000 of overpayments up until 27 July 2015.

So far I had been doing this with regular overpayments of £900, as part of my direct debit. (My obligatory payments were £906, so I was paying £1806 in total.)

However, I then made an extra overpayment of £1100, and I found that Natwest had reduced my obligatory payments to only £880. This means that if I make the full £18,000 of overpayments within the first year, I can't make as much of a dent in my mortgage than I would have done if they'd kept the obligatory payment at £906. I've been told that they automatically reduce the obligatory monthly payment if I make an overpayment of £1000 or more. But I don't understand – if I'd made the payments in smaller chunks (say a £500 and a £600), does this mean they'd not have reduced my monthly payments?

And what if I want to increase the regular overpayment on my monthly amount to £1100 or £1200? Does this mean they would recalculate and decrease my obligatory amount every month? I'm trying to increase the amount I'm paying back, but it seems that Natwest is trying to stop me from doing this.

Many thanks for any advice.

Watty1

I had that with my NatWest mortgage. You really can only pay off 10% within a one year period, so calculate the total amount due when you first make an overpayment and then that overpayment comes off the 10% and the year starts ticking. They will reduce the mortgage repayments due. You could calculate how much of an overpayment you can make each month - but - they will penalise you if you go over the 10%. There isn't an way round that

dating_thoughts

Tom_Spilsbury wrote: »

Hello –

I'm just after a bit of advice about making overpayments on my mortgage.

As is common with many mortgages, I am allowed to make overpayments of up to 10% of the outstanding balance in each year. I took out a mortgage of £180,000 on 27 July 2014, so I assume I can make up to £18,000 of overpayments up until 27 July 2015.

So far I had been doing this with regular overpayments of £900, as part of my direct debit. (My obligatory payments were £906, so I was paying £1806 in total.)

However, I then made an extra overpayment of £1100, and I found that Natwest had reduced my obligatory payments to only £880. This means that if I make the full £18,000 of overpayments within the first year, I can't make as much of a dent in my mortgage than I would have done if they'd kept the obligatory payment at £906. I've been told that they automatically reduce the obligatory monthly payment if I make an overpayment of £1000 or more. But I don't understand – if I'd made the payments in smaller chunks (say a £500 and a £600), does this mean they'd not have reduced my monthly payments?

And what if I want to increase the regular overpayment on my monthly amount to £1100 or £1200? Does this mean they would recalculate and decrease my obligatory amount every month? I'm trying to increase the amount I'm paying back, but it seems that Natwest is trying to stop me from doing this.

Many thanks for any advice.

I think Tesco mortgages are meant to be good as they may let you make larger overpayments. This might be worth considering if you're not in a fixed mortgage with exit penalties

Tom_Spilsbury

Thank you very much for your comments.