Nationwide mortgage switch - overpayment reserve

Sanne

Hi,
We are now able to switch our deal with Nationwide and decided to stay with them. We’ve built up an overpayment reserve over the last two years but when I go through the online application to switch I’m not clear what happens with this. 

Looking through the Nationwide website and reading the offer I’m not any wiser either. Has anyone switched recently who can let me know if the overpayment reserve that was built up is removed or remains available on the account to underpay later on if needed? (Original mortgage was two years ago so not losing any other rights that older mortgages might have). If it’s removed by default, can I call them up to keep it before switching online or do I then need to switch on the phone - and if I switch on the phone with advice, does that change anything re them doing affordability checks etc? (I’m the main income earner and on furlough so with a much reduced household income which might mean affordability fails. Before I get shot though, even if I was to lose my job we could continue paying the full mortgage for at least another year from savings).

Thank you!

jaxkesa

I switched with Nationwide a few years ago and remortgaged away from them last year. Both times, I had to call them to ask them to use part of the overpayment reserve. They emailed me a basic letter which I had to sign, scan and email back confirming that I was happy for them to 'use' my reserve and wouldn't be able to borrow it back.

They did it all straight away and I was then able to complete the switch online with the lower LTV and it was all done done without advice. It seems a bit old-fashioned but must be the way they do things. Presumably if you don't call, they just keep the overpayment reserve in place.

Sanne

Thank you - it seems to give the LTV including the overpayment reserve (though the amount outstanding on the switching tool is different to the one I can see when viewing my account on the app... only by a few hundred though); I might need to give them a call to check as it would be silly to lose it as it won’t change the rates on offer...

Sanne

If anyone finds this later on, I’ve chatted to Nationwide and they say you keep the reserve.

Shelly987

jaxkesa said:

I switched with Nationwide a few years ago and remortgaged away from them last year. Both times, I had to call them to ask them to use part of the overpayment reserve. They emailed me a basic letter which I had to sign, scan and email back confirming that I was happy for them to 'use' my reserve and wouldn't be able to borrow it back.

They did it all straight away and I was then able to complete the switch online with the lower LTV and it was all done done without advice. It seems a bit old-fashioned but must be the way they do things. Presumably if you don't call, they just keep the overpayment reserve in place.

Sorry to drag up an old thread but struggling to get an answer and this is the closest I have found.

I have a two year fixed term mortgage with Nationwide. I want to overpay to improve my LTV at the end of the fixed term. However, on Nationwide's website it says that ALL overpayments go into a 'mortgage overpayment reserve'. It then goes on to explain the impact of this overpayment reserve on LTV;

"When borrowing more, the overpayment reserve is also used in our calculations for working out your Loan To Value (LTV).

For example, the mortgage balance on your account says £90,000. This includes an overpayment reserve of £10,000. So we recognise your balance to be £100,000.

We do this because we could allow you to underpay or borrow back the £10,000 you’ve overpaid at any time. This depends on your mortgage deal terms and conditions."

This suggests to me that anything you overpay (and is in your overpayment reserve) can NOT be used to improve your LTV. Or am I missing something?

notes1

From what I am aware the LTV and your rate and monthly payment wouldn’t be affected anyway until you next remortgage as you are on a fixed rate. 

When you come to remortgage, (like I did) they gave me the option of keeping or using your overpayment reserve. I chose to keep mine as overall, even though it was large amount it had very little effect on the end rate as was long way from next LTV band anyway. 

I think most of the nationwide mortgages I looked at remortgaging to said you couldn’t borrow any overpayment back as such, but could stop paying and use the reserve money as payment towards mortgage. 

Keep up the overpayments. I am now mortgage free. It’s amazing how this creeps up on you.

Shelly987

Thanks Notes1. I don't really understand that 'keep it' part, is it purely so you can dip into it if you want to pay less one month in the future? If that is the case, why would you not just set the money aside into savings account etc. and us it the same way. But glad there is an option to 'use it', that's what I will be doing if it will achieve that next LTV band.

Glad to hear you are mortgage free - I'm right at the start of my journey so a while to go yet!