Nwide remortgage - can they charge us SVR for a whole month when we've paid half the mortgage off

sidsnotherts

We've been with Nationwide for over 10 years on various deals. Our latest fixed term came to an end so we took the opportunity to make a large lump sum payment. We had to wait for the term to end to avoid early repayment charges. So on 1st of the month our full mortgage switched to a Standard Variable Rate and we quickly made the lump sum payment that day.  Effectively our mortgage is now halved but they've charged us a full month SVR % on the full amount - £2k more than expected. Despite the fact we only had the full amount for 2 days, and its now half that. I thought NW charged daily interest. Any thoughts? NW haven't been any help on the phone and we're wondering whether to escalate it. One person we spoke to at NW said we could have paid off the lump sum in the last month of our term without any early repayment charges but we've never heard that before, it certainly has never been sent to us in writing as an option or we would have done it. Seems really unfair that they're charging us for a mortgage amount we don't have anymore. 

MattMattMattUK

sidsnotherts said:

We've been with Nationwide for over 10 years on various deals. Our latest fixed term came to an end so we took the opportunity to make a large lump sum payment. We had to wait for the term to end to avoid early repayment charges. So on 1st of the month our full mortgage switched to a Standard Variable Rate and we quickly made the lump sum payment that day.  Effectively our mortgage is now halved but they've charged us a full month SVR % on the full amount - £2k more than expected. Despite the fact we only had the full amount for 2 days, and its now half that. I thought NW charged daily interest. Any thoughts? NW haven't been any help on the phone and we're wondering whether to escalate it. One person we spoke to at NW said we could have paid off the lump sum in the last month of our term without any early repayment charges but we've never heard that before, it certainly has never been sent to us in writing as an option or we would have done it. Seems really unfair that they're charging us for a mortgage amount we don't have anymore. 

Does the contract say interest is applied on the balance on the first day of the month?

What does the contract say, mortgage contracts are usually very specific about everything, which is why they are long (and tedious) to read.

K_S

@sidsnotherts Nationwide (like the vast majority of lenders now) does charge interest on a daily basis, so even though they've taken a larger payment, the portion of the payment that would be charged as interest would be based on the number of days on SVR. I hope that makes sense!

Even if you'd paid the lump sum off in the last couple of days leading up to the end of the month, it would probably still have resulted in the same DD being taken as that would not be sufficient time for them to adjust the DD payment.

And for future reference, what you have quoted is correct, Nationwide do allow penalty free overpayments in the last month of the fix when you're doing a rate-switch and staying with Nationwide. 

Edited: Not entirely sure the struck-off part is correct as I can't find any formal mention of it anywhere

sidsnotherts said:

We've been with Nationwide for over 10 years on various deals. Our latest fixed term came to an end so we took the opportunity to make a large lump sum payment. We had to wait for the term to end to avoid early repayment charges. So on 1st of the month our full mortgage switched to a Standard Variable Rate and we quickly made the lump sum payment that day.  Effectively our mortgage is now halved but they've charged us a full month SVR % on the full amount - £2k more than expected. Despite the fact we only had the full amount for 2 days, and its now half that. I thought NW charged daily interest. Any thoughts? NW haven't been any help on the phone and we're wondering whether to escalate it. One person we spoke to at NW said we could have paid off the lump sum in the last month of our term without any early repayment charges but we've never heard that before, it certainly has never been sent to us in writing as an option or we would have done it. Seems really unfair that they're charging us for a mortgage amount we don't have anymore. 

sidsnotherts

We were actually advised by a mortgage broker on when to pay off the lump sum and switch. Unfortunately we weren't told we could have paid off the lump sum a month ago and switched to the new deal, which would have saved £2k. Is it common knowledge with brokers that there is no early repayment in the final month of a fixed term? Ours said he wasn't aware. 

K_S

@sidsnotherts This is the Nationwide rate switch page for brokers. Based on a quick skim, I don't see any mention of this feature on there.
https://www.nationwide-intermediary.co.uk/products/rate-switch

I couldn't say whether it's common knowledge or not but personally I only know about it because I've seen people mention it on the forum. And I would expect it to be mentioned by Nationwide in any product-end communication that they send to the borrower.

sidsnotherts said:

We were actually advised by a mortgage broker on when to pay off the lump sum and switch. Unfortunately we weren't told we could have paid off the lump sum a month ago and switched to the new deal, which would have saved £2k. Is it common knowledge with brokers that there is no early repayment in the final month of a fixed term? Ours said he wasn't aware. 

ACG

There are ERCs in the final month as far as I am aware.
There are plenty of threads on this site where people have paid off a lump sum in the final month and been charged an ERC if they went over the overpayment facility allowance. 

Your payment typically goes out on the first on the month and assumes everything will carry on as normal. 
If you made an overpayment, it will take effect from the following payment. You wont have been charged the full month on the SVR, but because your payment probably went through before the overpayment it looks like that. It will all correct itself out. 

K_S

@sidsnotherts Following what ACG said above, I tried to find some formal mention of this but couldn't find anything. Nationwide's customer facing website only mentions the following scenarios where an ERC is waived so the information you were given (and what I have also heard on the forum previously!) "One person we spoke to at NW said we could have paid off the lump sum in the last month of our term without any early repayment charges" might not be accurate.

And as mentioned above, if you were only on SVR for a couple of days, you've not lost out by 2k, you would have paid the SVR rate of interest only for the couple of days that you were on SVR, the excess would have gone towards overpaying your capital.

sidsnotherts

Thank you so much for the help and advice, much appreciated