Nationwide overpayment options

nmjams

I want to start making smallish overpayments of £50 a month but nationwide have said that anything under £500 would be pointless, is that true?

I've tried ringing them for the last 3 days, been on hold for over 45 mins so so i've given up!. Can someone help me by explaining what the third option does?

1.Pay off my mortgage earlier by reducing my mortgage term

2. Reduce my future monthly payments

3.Keep my existing payment and term as-is. (At the next natural mortgage payment change, i.e. interest rate change, my payment will be automatically recalculated).

Basically all i want the overpayments to do is to get me to 75% ltv when i come to remortgage in 5 years time. i know the value of my house may have gone up by then but it's an ex LA property and it looks like i purchased at the top end of what they have been going for in my area over the last few years. Basically i dont expect the value to go up by much, if at all.

Thrugelmir

nmjams wrote: »

I want to start making smallish overpayments of £50 a month but nationwide have said that anything under £500 would be pointless, is that true?

Who at the NW said this?

nmjams

Thrugelmir wrote: »

Who at the NW said this?

a lady in the customer service dept, i called them just before bi started the mortgage.

Thrugelmir

I'd ignore her then. Over payments however small will build over time. Like rolling a snow ball. The effect build and builds as interest gets saved. Getting debt free quicker is worth the effort.

Puzzcat

I looked at doing this, also with nationwide bit it seems to indicate if under £500 a month then they just decrease your following months payment. So I guess saving and then paying the £500 in one go is the only way to go...

rtho782

I've randomly made overpayments to my NW mortgage via online banking (I also bank with NW) and they don't affect my later payments, so must be decreasing my term.

midge406

I've been making overpayments from £50-100 most months to my NW mortgage for a few years. They have never changed my monthly payments.

£50 a month is definitely worth doing.

This will show you how much you will save in the long term: http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

NinaSwiss

Frrom the horse's mouth:
http://www.nationwide.co.uk/guides/news/articles/2016/02/mortgage-overpayments

Reducing mortgage payments vs reducing term


Overpayments can affect your mortgage in two ways – they can reduce your monthly payments or reduce the term of your mortgage. At Nationwide, if you make an overpayment of under £500, we won't automatically reduce your monthly payment amount, however, your overall mortgage balance will be reduced immediately. If you'd like your monthly payment to be recalculated, please call us on 0800 30 20 11 or visit your local branch.
If you have a capital repayment mortgage and make an overpayment of £500 or more, we'll automatically re-calculate your monthly payment. However, if you'd like to keep your payment the same and reduce your mortgage term, you'll need to let us know. You can arrange this at any time via the Internet Bank or by giving us a call.

NinaSwiss

I make regular overpayments of over £500 each month. Normally this would result in monthly payment being recalculated but I opted for a reduction in term instead. This is easily done online via your nationwide account.

trailingspouse

Another option - instead of overpaying by £50 each month, decide how much you can afford to pay out.

It would work like this - your current mortgage might be £625, and you know you can afford to overpay by £50, making a total outlay of £675. Tell the bank that regardless of any recalculations, you want to pay a total of £675 per month.

In the first month your overpayment will be £50, in the second month the actual mortgage amount will be a bit lower than £625 so you will be overpaying by '£50 and a bit'. In the third month you will be overpaying by '£50 and a bit more' and so on. But you will only ever be paying £675, which you've already worked out you can afford to do.

Knowing that you are overpaying the mortgage by more and more each month will be a VERY nice feeling.

tiz

I make overpayments - that's on the BMR - might be different for other products.

Whichever of the three options you choose, your over payment it will have exactly the same effect on lowering the amount you owe. The amount you owe and the interest on it are recalculated immediately.

The options are just want you want them to do about the fact you now owe them less money.

1. Keep paying the same amount per month and finish sooner.
2. Pay less per month and finish at the same time.
3. Keep paying the same amount per month for now, but ultimately go for option 2 when they next get around to working things out.

If you'd like the required payment to go down pick 2. To keep the benefits of overpaying, you'd still pay the same amount just up the over payment to make up the difference. It's handy if you might be short on cash one month and having a lower mortgage payment and skipping the overpayment that month helps.

Otherwise pick 1 and it will stay the same as now but your term will shorten - which won't make much difference if you remortgage before your term is up anyway.

I pick 3 and they don't seem to recalculate much, don't do it annual only for the interest rate change.