Overpayments with NATWEST

FlashBarry

Hi all,
I have just taken on a new mortgage with NATWEST as part of house move. I'm looking to overpay small amounts when I can.

I just spoke to a guy at their call centre and he gave me the account number and sort code of the mortgage account so that I can sent payments to it via online banking. Fine.

I said that I want any over payments to reduce the term of the mortgage rather then the monthly payments. I have done this with my previous lender and I have seen this many time in the mortgage free board on MSE. The chap on the phone basically said that this is not possible and over payments will always pay a proportion of interest. This goes against what I understand.

Is he right?

Thrugelmir

All sounds very confused. Overpaying small amounts is unlikely to trigger a revision in the monthly payment. Normally this only occurs where the overpayment is significant (over £500) or the interest rate changes (variable rate mortgage or end of product period).

As you can make over payments as and when you like. You have total flexibility as to what you do. Over payments by their very nature will reduce the term.

FlashBarry

Yes, I thought that any over payments come straight off the capital. i.e the normal monthly mortgage amount covers the required monthly interest charge and a bit of capital and an over payment would be purely capital.

Why does their call centre guy think it would be paying for interest too?

When I said I wanted the over payments to reduce the term, he said that ANY reduction in term would require a new mortgage application. Eh?

brexit

We overpay every 2/3 months £1000+ and it reduces the capital exactly the same amount also reduces the interest from next payment.

spidereyes

I'm with NatWest and have a regular overpayment set up online, around £400 month extra which is just collected with my usual mortgage direct debit.

I'm wondering if they maybe calculate it differently if you make ad hoc payments rather than a regular one?

ViolaLass

Thrugelmir wrote: »

All sounds very confused. Overpaying small amounts is unlikely to trigger a revision in the monthly payment. Normally this only occurs where the overpayment is significant (over £500) or the interest rate changes (variable rate mortgage or end of product period).

As you can make over payments as and when you like. You have total flexibility as to what you do. Over payments by their very nature will reduce the term.

Not necessarily. I don't know NatWest's policy but if they recalculate the monthly payment each time you make an overpayment then it won't reduce the term.

Must be possible to tell them to reduce the term though. Try ringing again and asking to talk to someone who knows what they're talking about?

You could also look at the info you were given when you took the mortgage out - it should specify what they do with overpayments.

Thrugelmir

ViolaLass wrote: »

Not necessarily. I don't know NatWest's policy but if they recalculate the monthly payment each time you make an overpayment then it won't reduce the term.

I'd say it's unlikely for small amounts. Due to the administration involved. Formal notification of new direct debit amount to be collected etc.

ViolaLass

Thrugelmir wrote: »

I'd say it's unlikely for small amounts. Due to the administration involved. Formal notification of new direct debit amount to be collected etc.

The other option is that small overpayments may just be counted as an advance on the next normal monthly payment.

FlashBarry

Well so far, I have transferred £100 into my mortgage "account", but nothing has changed on my mortgage balance what so ever! So, ether they take an age to get payments processed, or they are dong something tricky with the calculations. I hope they haven't lost it!

ViolaLass

FlashBarry wrote: »

Well so far, I have transferred £100 into my mortgage "account", but nothing has changed on my mortgage balance what so ever! So, ether they take an age to get payments processed, or they are dong something tricky with the calculations. I hope they haven't lost it!

They may be holding it and not applying it to the mortgage. You need to ask.

minimike2

Some lenders will apply smaller overpayments to a "pre payment" account, which then comes off the balance in one lump each year at the annual payment review. Despite this, in most instances with prime lenders, the pre-payment funds will reduce the balance on which interest is charged, so you still get the benefit of this. You should check with your individual lender as to how they do it.