Mortgage overpayments

edited 16 November 2022 at 5:03PM in Mortgages & endowments
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Matthew1268Matthew1268 Forumite
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edited 16 November 2022 at 5:03PM in Mortgages & endowments

I know Martin has covered mortgages and overpayments recently, after looking into my own I wanted to raise this issue and ask what his advice would be. Also does he think this is fair of Nationwide ?

I have been in a fixed deal for the last 4 years, it ends next September 

I started making overpayments about 2 years ago regularly overpaying £225 a month

As my monthly overpayments are under £500, Nationwide put these payments into a ‘Reserve’

There is now £7845 in this reserve - it will be held there and only applied at the end of the product - 5 year deal. 

My issue is - this is a large sum however I am not receiving or gaining any interest on this amount. 

Is this a standard in the industry ?
Is nationwide benefiting from interest on this amount?

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  • edited 16 November 2022 at 5:16PM
    K_SK_S Forumite
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    edited 16 November 2022 at 5:16PM
    @matthew1268 You are already benefiting from the overpayments that you have made. With Nationwide all overpayments will reduce the interest you pay from the following day, even if it's earmarked as an 'overpayment reserve'. 

    For overpayments of less than £500, Nationwide will keep your minimum monthly payment and term unchanged and adjust your minimum monthly payments only at the next change in interest-rate, which is usually when the current fix ends.

    I know Martin has covered mortgages and overpayments recently, after looking into my own I wanted to raise this issue and ask what his advice would be. Also does he think this is fair of Nationwide ?

    I have been in a fixed deal for the last 4 years, it ends next September 

    I started making overpayments about 2 years ago regularly overpaying £225 a month

    As my monthly overpayments are under £500, Nationwide put these payments into a ‘Reserve’

    There is now £7845 in this reserve - it will be held there and only applied at the end of the product - 5 year deal. 

    My issue is - this is a large sum however I am not receiving or gaining any interest on this amount. 

    Is this a standard in the industry ?
    Is nationwide benefiting from interest on this amount?

    I am a Mortgage Adviser - You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. 

    Please do not send PMs asking for one-to-one-advice, or representation.

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