Mortgage Overpayment Help

LE1982

Firstly, my apologies if this has been discussed / answered elsewhere. I have had a look and can't really find an answer to help me.

I have a mortgage, which is 1 year into a 3 year fixed term, 30 years in total - at present.
I am able to save £250 a month, but with very little interest I think I would be better to put this £250 as an over payment. When I spoke to my provider they said over payments less than £500 reduce the term and payments above £500 means I can choose to reduce the monthly payments. The limit of over payment per year is 10% of loan amount

I won't be able to pay above the £500, but what does reducing the term mean? Is it referring to the 3 year or the 30 year term. Nationwide just kept repeating the same line and weren't much help.

Any help is much appreciated.

[Deleted User]

It will reduce the overall terms - ie the 30 years. Your fix will still run to the current end date.

LE1982

I have been reading lots of posts and comments. People refer to paying the capital with their over payments, is this what my £250 will be doing? or will it be reducing the 30 years to say 25, and when my current fix ends, my monthly payments will now be higher due to the shorter term of 25years. I hope I am making some sense. Thanks

TrickyDicky101

It just means your monthly payment will remain at whatever it currently is. Hence, as you have made an overpayment, your mortgage balance on which interest is calculated will be less so if you make the same monthly payment, more of it will go towards paying down the capital outstanding.

Thus your expected mortgage term (ie time remaining until entire capital balance is repaid) will be falling.

getmore4less

It will make no difference to the real term.

What they mean is payment stays the same or gets recalculated.

Overpay what you can as soon as you can it reduces the amount you owe and therefore what your mortgage costs.