Are Natwest the only lender offering a 20% yearly overpay facility?

kwangomango

Everyone else appears to be 10%. Correct?

simon_or

I think with Barclays you have a trick that effectively allows overpayments of more than 10%. Also heard on the forum that Firstdirect has ERC free fixed mortgages. I've never overpaid more than 10% so don't know how much truth there is in any of these.

JMA74

Nationwide's 10% of original amount borrowed can quickly be more generous than Natwest's 20%

I think Metro do 20% as well (or they used to at least)

kwangomango

JMA74 said:

Nationwide's 10% of original amount borrowed can quickly be more generous than Natwest's 20%

Thanks, that could make a big difference.

Novice_investor101

I’m not sure if it applies to new customers but YBS offered 10%, 50% & no ERC for overpayments on the renewal deals I was offered a couple of months ago. The interest rate was marginally higher for the 50% & no ERC products. 

Newbie_John

@simon_or, what's the Barclays trick?

simon_or

Newbie_John said:

@simon_or, what's the Barclays trick?

I couldn't explain how it works but aiui essentially payment amounts below a certain threshold don't count towards the 10% overpayment limit so you could for example make multiple overpayments of smaller amounts without touching the 10% allowance. I think that's how it works.

ElwoodBlues

simon_or said:

Newbie_John said:

@simon_or, what's the Barclays trick?

I couldn't explain how it works but aiui essentially payment amounts below a certain threshold don't count towards the 10% overpayment limit so you could for example make multiple overpayments of smaller amounts without touching the 10% allowance. I think that's how it works.

That's how NatWest works too - any overpayment less than 1k doesn't trigger the repayment to be recalculated. Cue lots of payments of £990 lol. Less likely to be an issue when NatWest already give 20% allowance, but if you're on a 5 yr fixed deal it can be advantageous in the last year or two. As soon as you're rate changes they recalculate the monthly payment, so the advantage is lost at that point.

For the same reaon, if you want to pay off a lump sum of up to 20% and your fixed rate term is close to ending, you may be better to wait until you've started a new fixed rate period before making the overpayment.

waveneygnome

First Direct:  unlimited overpayments allowed on their fixed rate mortgages.  You only pay the ERC (if you clear the mortgage within the fixed rate period) on the outstanding balance.

 Trick is to not pay the whole mortgage off early - leave say £1k remaining, only have to pay the ERC on the £1k

Say 10yr fixed at £200k mortgage.
Win lottery in year 2
Overpay mortgage with winnings down to £1k
Ask or mortgage settlement figure, which would be £1k+ERC @ say 4% = £1040 to clear mortgage.

MWT

waveneygnome said:

First Direct:  unlimited overpayments allowed on their fixed rate mortgages.  You only pay the ERC (if you clear the mortgage within the fixed rate period) on the outstanding balance.

Check the details on your mortgage carefully though, this is what First Direct say about their ERC at the moment...

"If you take a Fixed Rate Mortgage and you repay the whole of your mortgage during the Fixed period, an Early Repayment Charge will be charged at 3% of the original mortgage amount during the first year and 2% of the original amount if the mortgage is closed after that during the Fixed Rate Period."

kwangomango

ElwoodBlues said:

simon_or said:

Newbie_John said:

@simon_or, what's the Barclays trick?

I couldn't explain how it works but aiui essentially payment amounts below a certain threshold don't count towards the 10% overpayment limit so you could for example make multiple overpayments of smaller amounts without touching the 10% allowance. I think that's how it works.

That's how NatWest works too - any overpayment less than 1k doesn't trigger the repayment to be recalculated. Cue lots of payments of £990 lol.

Could you explain very simply how that works, please? Why are overpayments less than £1k not considered part of the 10%?