A mortgage overpayments question

TBagpuss

It does depend on your mortgage. My mortgage is with Nationwide, as 2 separate accounts . One account, (which is the mortgage I ported from my previous property) allows me to borrow back overpayments, although I think if I wanted to take a holiday I would have to formally borrow back the overpayment and then use the money to pay the monthly amount, I don't think it would be worked outautomativally if I just stopped paying.

The second account which is the extra borrowing I took out when I moved house allows overpayments of up to 10% (while I am on the fxed deal) but from memory, I don't have an *automatic* right to borrow them back, although I imagine that having overpaid might well be relevent in the event that I asked for a payment holiday.

But it is entirely down to the terms of your particular loan, there is no standard rule.

AlexMac

Ask. Nationwide (where we have a mortgage with no overpayment penalties) allowed a family member to pay interest only a couple of times for a few months when income dried up...

But then IME Nationwide, as one of the few remaining Mutuals, are a good lender as they are accountable to members not shareholders or owners

trailingspouse

Ditto with Nationwide - we have been overpaying for a while now, so if we were up against it, we would be able to use the overpayment reserve that has built up to fund the minimum mortgage payment for as long as it lasted.

For example - actual mortgage per month £1500. Overpayment = £500 per month, giving a total monthly payment of £2000. After 12 months there will be 12 x £500 = £6,000 in the overpayment reserve. If income had dried up, you could fund 4 months of 'normal' mortgage payments (4 x £1500) before beginning to struggle, which might just be enough time to get sorted financially.

I don't know if you would have to prove that your income was reduced, or if you could just use it to cover, say, a holiday. It seems a bit pointless to overpay with the intention of using that money later - you'd be better off just saving it. But it's a handy safety net if the !!!!!! does genuinely hit the fan.