NatWest Allocation of Overpayments

Istate75

Hi there,

I have a problem with Natwest which I could do with some thoughts on.

I've had my mortgage with Natwest for a number of years and have decided I want to pay it off quicker by making monthly overpayments.

I'm on a 2 year tracker, which I refixed a year ago, so 1 year to go and have an allowance of 10% for overpayments. If I overpaid by more than this last year the ERC was 1% and 0.5% for this year

I spoke to the mortgage centre at the beginning of 2015 to tell them I wanted to overpay and they gave me the figures above and confirmed that any overpayments would count as a capital repayment, but my monthly direct debit would not be changed. Happy days I thought.

The first year I made small overpayments, totalling £3k and when I received my statement I saw that interest adjustments had been made for the payments.

Having a bit more spare money, in 2016 I overpaid £5k and again I have seen interest adjustments listed.

I called the mortgage centre again at the beginning of this year to double-check the overpay allowance and asked about how the ERCs are applied if I exceed. To my thinking, if my ERC is only 0.5% but I'm saving 2.39% interest I'm still ahead. They confirmed that is the case.

I've now overpaid £13k this year and after my payment this month I received a letter to confirm that my payments were being reduced to take account of the last payment.

Confused, I called the mortgage centre to ask why I received the letter when I have overpaid every month this year (all around the same amount). They tried to say it was because the payment was over £1k, but they all have been this year. They then confirmed the payments had been logged as 'account payments' not 'capital repayments'? They now say that I will not receive the benefit of reduced interest as they only calculate my interest in January each year.

I had been told when I started overpaying that the payments would be credited immediately and I would see reduced interest charged. I did see the interest adjustments the last 2 years, although when I went back to calculate, they are lower than they should be.

I told them that I am very unhappy to have been mis-advised and that I should not be charged interest on money I have repaid. By the way, I have not received any ERCs yet.

Has anyone else had a similar issue? I've told them I want the interest credited, but I think it was a junior person at the mortgage centre who couldn't understand the problem, who has just ordered a statement for my reference, which I should get in a few days.

If they don't play ball, so to speak, do I have a case for a complaint? In total I worked out they have overcharged interest of about £500 over the last 3 years, which is a lot of money.

I don't want the cost of moving my mortgage because I will have paid it off in 2 years.