Overpaying NatWest Mortgage

amillionlittlepieces

Hi All,

I recently spoke with Natwest regarding overpaying my mortgage and their advice was as follows;

If I overpay by anything more than £1,000 then my monthly payment would automatically reduce and my terms would stay as is.
If I overpay by less than £1,000 then nothing happens to my monthly payment.

In the latter, I then asked if my term then automatically reduces, ie I owe less money so takes less time to pay off, and the advisor's response was that it would not. This made me think about what actually happens with my overpayment. Does it just get 'held' by Natwest until I settle the loan? Or does the balance, and therefore interest amount, reduce?

Does anyone have experience with this?

Thanks!

dark^knight

Hi,

Welcome to the overpayment club

They should allow you to keep your monthly payments the same and for the term to reduce with the overpayments.

With overpayments, your balance will reduce with each overpayment, and the amount you pay in monthly interest will reduce as well.

MichaelDH

We are with the Coventry, and as long as the over payment is less than 3 x the usual monthly payment then it is treated as an over payment, anything more than this is treated as a capital repayment so the usual monthly payment is automatically recalculated.

A limit of £1,000 seems very low, but suppose it depends on what the mortgage balance is... might be worth calling again just to make sure you've told the right information.

Beetroot24

My mortgage is with RBS, but my T&Cs are titled Nat West, so I'd imagine they use the same ones (same group and all of that).

When we took the mortgage out, about 3.5 years ago, you had the choice to keep the payment the same or reduce it. We had a right faff with them about 2 years ago as a £1k overpayment triggered a recalculation. At the time, their T&Cs online (under Manage Your Mortgage), said that you had the choice (several times). They flat out refused to revert the payment back, and pretty much called me a liar, even when I told them every single o/p I had ever made, as I used to keep a tight diary. They claimed I hadn't noticed how much I was paying a month (?!).


So I complained. They didn't get back to me in the time frame they have to respond, and then funnily enough, all of the info online changed, and they argued that I was wrong (despite the fact I'd made several o/p of £1k+), but I had a screenshots (taken at the time I made the complaint, stating we had a choice) proving they had changed it online after the fact, so they finally reverted my payment to original amount.

It doesn't get held, and neither option reduces the contractual term. My term is still officially what it would have been without the o/ps, but the overpayment calculator shows that it will be paid off 7 years sooner if we continue, and nothing changes. If they recalculate your payment, you need to keep upping your overpayment in order to pay the balance off quicker.

Personally, I don't want my payment being recalculated every month and then have to keep upping my overpayments, as that eats into the 10% limit (even if it's a couple of quid), and we were told that overpayments would not recalculate the payment unless we wanted them to.

Loads of waffle there sorry, but yeah, if you overpay by £1k or more, then they will recalculate your payment, so if you don't want to, pay half one day, and half the next

amillionlittlepieces

I've actually spoken with Natwest today and reached an advisor who gave a clearer explanation of how it works.

If you pay over £1000 it automatically adjusts the monthly payment - that's the easy bit.

If it is less than £1000 then the owing balance is reduced and therefore the amount of interest you will pay is reduced.You will pay less interest and the term will reduce if you kept the mortgage for the full duration. Your contractually duration won't change, but the actual duration will.

MichaelDH

amillionlittlepieces wrote: »

I've actually spoken with Natwest today and reached an advisor who gave a clearer explanation of how it works.

If you pay over £1000 it automatically adjusts the monthly payment - that's the easy bit.

If it is less than £1000 then the owing balance is reduced and therefore the amount of interest you will pay is reduced.You will pay less interest and the term will reduce if you kept the mortgage for the full duration. Your contractually duration won't change, but the actual duration will.

Glad you managed to get a better explanation