Overpaying 24 December 2015 at 12:06PM in Mortgage-free wannabe 7 replies 668 views

pollyanna24

I have a Nationwide mortgage which, when you pay an overpayment of £500, Nationwide will reduce your monthly payment.

Just say for example, in month 1, I only overpay £150 (only she says!) and in month 2, I overpay £600. Will my payment go down taking into account both overpayments, or just the one where I overpaid by more than £500?

I’m guessing the former as the computer will just take the amount left outstanding, the term left on the mortgage and work out the new amount from that.

I’m asking because I can’t decide whether to save up my overpayments so that they are over £500 (although the overall aim is to be MF, my initial aim is make my monthly payments lower) or just stick spare money on when I have it (I would like to do this as it will deter me spending any spare money I have!).

elantan

If you pay over £500 you receive a charge so best not to pay more than £500 a month

You can ask for it to reduce your term also

elantan

Well thats my mortgage ... best check with them though incase yours allows higher payments

FreddieFrugal

On the nationwide website, if you're logged into your account, and you click onto your mortgage there is the option somewhere to select what you want to happen should you pay over £500.

You can have it reduce your monthly payment OR reduce the length of the mortgage term whilst keeping your regular monthly repayment the same.


With overpaying, you're better paying off as much as you can as soon as you can (as long as that's within your overpayment allowance - should be 10% of your original starting balance with Nationwide)

So paying off £100 a month over 5 months, is better than waiting and paying nothing for 5 months, then paying £500 in one go.

However, if you are able to pay £500 immediately, then that is better than splitting that amount over several months.

So sooner the better. What I've been doing is paying off the Maximum I can straight away, then saving up for the next year to do the same thing again.

pollyanna24

elantan wrote: »

If you pay over £500 you receive a charge so best not to pay more than £500 a month

You can ask for it to reduce your term also

Although my second mortgage (when I get it!) will limit overpayments (10% of original amount taken out, my existing mortgage tracks the BoE rate +2% and there is unlimited overpayments. I can also take back overpayments on this mortgage, so plan to overpay all that I can and kinda use it as my savings account also.

pollyanna24

FreddieFrugal wrote: »

On the nationwide website, if you're logged into your account, and you click onto your mortgage there is the option somewhere to select what you want to happen should you pay over £500.

You can have it reduce your monthly payment OR reduce the length of the mortgage term whilst keeping your regular monthly repayment the same.


With overpaying, you're better paying off as much as you can as soon as you can (as long as that's within your overpayment allowance - should be 10% of your original starting balance with Nationwide)

So paying off £100 a month over 5 months, is better than waiting and paying nothing for 5 months, then paying £500 in one go.

However, if you are able to pay £500 immediately, then that is better than splitting that amount over several months.

So sooner the better. What I've been doing is paying off the Maximum I can straight away, then saving up for the next year to do the same thing again.

Thanks for your answer. As my initial aim is to get the monthly payment lower than the £800 it will be when I take out the second mortgage, putting £100 each month won't achieve this though. I just wondered if I did this for a few months and then somehow got enough to make an overpayment of over £500, would the computer recognise that I'd been making the little overpayments or just the one big one when recalculating the monthly amount?

Also, as I'm not on a fixed rate, at what stage would Nationwide recalculate my monthly payment if I were to just consistently put in £100 (or whatever as long as it's below £500) a month?

Kantankrus_Mare

I would be interested in the answer to this as well.

We have just fixed for 5 years with nationwide and I want to start overpaying sometime next year but overpayments will be £100 min and £150 max per month.

I assumed my monthly payment wouldnt change till after one year when we get the first yearly statement.? If at all?

elantan

I'm on a fixed myself ( but it is an old mortgage compared to some peoples)

My payments have stayed the same all the way through, from what I remember they don't reduce term or amount till you pay the £500 ( on my mortgage anyway)


Ps my mortgage isn't 10%overpayment ... it's £500 each mortgage account ( I have 2 so £1k a month max)