Advice on overpayment of Nationwide Mortgage

guy7469

Hi to everyone. New to the overpayment idea and like the idea of working less in the future.
We have three Nationwide mortgages
53,675.02
40,346.06
5318.04
Just got it down below 100K! Yippee
I know that I can overpay by as much as £500 a month on each one if I have the money. But if say for example I have £700 in total, do I spread the amount over the three or put the max £500 into the larger one and the rest on the other two, or just on the second one and forget about the small one.
We were trying to reduce the term equally on all three so they finish at the same time, but not sure now.
Any ideas would be helpful.
Good luck to everyone else:beer:

Guy

JonnyBravo

guy7469 wrote: »

Hi to everyone. New to the overpayment idea and like the idea of working less in the future.
We have three Nationwide mortgages
53,675.02
40,346.06
5318.04
Just got it down below 100K! Yippee
I know that I can overpay by as much as £500 a month on each one if I have the money. But if say for example I have £700 in total, do I spread the amount over the three or put the max £500 into the larger one and the rest on the other two, or just on the second one and forget about the small one.
We were trying to reduce the term equally on all three so they finish at the same time, but not sure now.
Any ideas would be helpful.
Good luck to everyone else:beer:

Guy

In short, if they are all the same rate it doesn't really matter.
We have two mortgages with Nationwide and put all our overpayments against the larger loan.
Why? No real reason... it's easier to do than dividing up and paying vs both accounts I suppose.... and the larger amount is a "further advance" we took a couple of years later for building works. They're both on the same term though.

I seem to remember you can change the length of your mortgage pretty easily with most Nationwide mortgages, so if you do get really hung up on finishing them together this shouldnt be a problem.... not sure why this is a concern though.... perhaps its a psychological thing for you?

unsure

Whatever you are planning it's well worth talking directly to Nationwide. They have laways been extremely helpful in our case and have been quite happy to do the number crunchung for us when we've asked about various options. We were stuck with a lousy endowment, sold it off and paid a chunk off mortgage, lowering outgoings. Then paid off another chunk with excess cash and finally paid the lot off severla years early about a month ago (actually £1 left in account at their suggestioon which allows us to keep their excellent building and contents insurance and maintains the possibility of increasing borrowings should the need arise). Now we can start saving for retirment! In each case NW was most helpful and flexible, very happy to talk things through and offer opotions which suited our needs. Can't praise them highly enough really.

belfastgirl23

I'd agree about asking the nationwide. our mortgage is with them and they really do try to be helpful. Perhaps ask them about rejigging the terms on your mortages so that you're using up the £500 and they're all finishing at the same time?

bootman

I agree about rejigging the term. I found them really helpful when i wanted to do this. It is surprising how little extra a month it is to drop a year or two.

guy7469

Rang nationwide tonight. Was told they reduce the money owed when overpayments are made, but only reduce the term at the end of the year accordingly to what was paid.
So have to wait until January. Decided to try to pay largest off first and any money left into second one.

doodle_bug

guy7469 wrote: »

Rang nationwide tonight. Was told they reduce the money owed when overpayments are made, but only reduce the term at the end of the year accordingly to what was paid.
So have to wait until January. Decided to try to pay largest off first and any money left into second one.

I'm in the process of making overpayments of £500/mth on each of my 3 accounts for the next 8-9 months with the Nationwide. I never thought about the term of the mortgage being reduced, obviously it will that is why we are making overpayments. I should have made overpayments of around £15000 by next August when the tie in ends, the term of my mortgage is until 2020. In theory I will have paid over 2 years in advance by next August and should be able to have payment holidays of over 2 years and still pay it off by 2020. If they automatically reduce the term then that could be a problem. Nationwide are fairly flexible but what if your circumstances change? Illness,Redundancy etc. I just got made redundant but the outlook is good however if I was to walk into Nationwide right now and want to re-mortgage just on my wifes income we'd be stuffed.

I've had around £24,000 in a savings a/c for nearly a year and have considered that a fall back but could have used it to make overpayments, the difference in interest earned and payed is about 1% but knowing that money is there and instantly available no questions asked has been worth it. We all have to weigh the pros and cons of overpaying the mortgage, that's why we are doing this

My three accounts are roughly £10000, £16000 and £24000. If I wasn't going to pay the max of £500 on each I'd pay off the bigger one's first because I'd be left with the smaller monthly payment on the £10000 if anything unexpected happened. With the money markets the way they are there is an increased chance of the Nationwide having shareholders and having a mortgage with them could be beneficial.

Kaz2904

The trouble with savings is that they are taken into account with regards to any benefits you are entitled to. So if you have that amount in savings and bare made redundant then you wouldn't be entitled to anything. If the money was already in your mortgage then you would have no savings so would be entitled to more benefits.

jamesd

Because your maximum overpayment is 500 a month per mortgage, you get most flexibility by paying it off the highest valued one up to 500, then the rest to the second largest. Once the two are equal you might as well split the money evenly or start to favor the one with the shortest term.

Shortest term because that increases your flexibility again: you aren't forced to pay off on the shorter schedule of the one that finishes first but can instead wait until the longest term ends if your situation changes.

If your money situation is unpredictable, paying the money to the one with the shortest term first is the choice that is best for flexibility: it eliminates the obligation to pay that mortgage first, so your minimum monthly mortgage payment commitment is reduced. That's potentially very helpful if young children are around and only one person in a couple is working.

If you do want to increase payments later it's probably cheap to reduce the mortgage term, probably only a hundred pounds or so in administration fee.

But you wrote that you wanted to work less in the future. Overpaying the mortgage isn't the way to do that to the greatest extent possible. Investing the money instead is what gives you the greatest potential benefit. See investing to pay off a mortgage for the way to use your overpayments to pay off the mortgage more quickly or retire early.