Overpaying by less than £500

pollyanna24

I have a mortgage with Nationwide which is on the BOE base rate plus 2%, so 2.5%.

If you overpay by less than £500, they don't change anything. If you overpay by more than £500, you can choose to lower your monthly payment or shorten the term (I think).

I wish to make the payments lower, so should I just save up the overpayments until I have over £500 before I make it, or put overpayments in dribs and drabs?

As there is fixed rate or tracker rate to expire as such, when would Nationwide recalculate a lower payment for me? Or would it be a case of me ringing them in say, a year, inform them of the little overpayments I have done and then they recalculate a new monthly payment?

Mummyisbeauty

i'd overpay in dribs and drabs as you get the benefit of extra time on some of the money. Extra time equals more interest saved.
Mine doesn't recalculate unless over 10k but will still go down in terms of time even if they don't recalculate.

pollyanna24

Mummyisbeauty wrote: »

i'd overpay in dribs and drabs as you get the benefit of extra time on some of the money. Extra time equals more interest saved.
Mine doesn't recalculate unless over 10k but will still go down in terms of time even if they don't recalculate.

True. But initially I would prefer the monthly payment to go down. Of course, paying it off early is the ultimate goal, but at the beginning I would like lower payments. As I can overpay on my mortgage with no limitations, it doesn't really affect me having a tiny payment (if I ever get to that stage!).

Mummyisbeauty

I'd save up then. I overpay a small amount but do it monthly as easier to budget but I know not everyone has that luxury. I think if you want to drop the payment the big lump sum might be better but not sure how much £500 will drop the payment a month.

pollyanna24

Mummyisbeauty wrote: »

I'd save up then. I overpay a small amount but do it monthly as easier to budget but I know not everyone has that luxury. I think if you want to drop the payment the big lump sum might be better but not sure how much £500 will drop the payment a month.

Thank you. It won't be by much, haha. When I was overpaying by around £1,000 a month, the payment used to drop by about £4, but this was when me and my brother used to overpay and were able to afford bigger overpayments.

Maybe if I put it on in dribs and drabs and then if I find it's getting hard to find the monthly payment (if I lose my job or what have you), then I can ask Nationwide to lower the monthly payment.

stedwell

Hi
I have a mortgage with nationwide and I overpay £500 every month. On their internet banking I have opted to have my term shortened but there is also the option to lower the monthly payment. It is very easy to do if you bank online. I never pay less than £500 as it won't change the term otherwise. If I don't have enough one month then I wait until the next. Also you must not pay more than £500 or you will incur an ERC.

pollyanna24

stedwell wrote: »

Hi
I have a mortgage with nationwide and I overpay £500 every month. On their internet banking I have opted to have my term shortened but there is also the option to lower the monthly payment. It is very easy to do if you bank online. I never pay less than £500 as it won't change the term otherwise. If I don't have enough one month then I wait until the next. Also you must not pay more than £500 or you will incur an ERC.

Thank you for this. I will save up my overpayments until I can afford £500.

I can pay over £500 as I'm not on any fixed or tracker rate, so I can make unlimited overpayments.