Question on big overpayment at end of fixed term

NorthernExpat

Hi all,

I've searched but can't see anyone asking this, and have tried to ask my bank but the chatbot is hugely frustrating.

My fixed term comes to an end in Dec 2025.  I'm planning on securing a new fixed rate as soon as possible and then backing out and getting a new deal if rates improve.  So say for this example that I secure my rate 6 months in advance and that works out the best deal so I stick with it.

Now say I want to make a big overpayment, which is above my overpayment allowance for the final calendar year of my mortgage.  I've already checked and my bank (NatWest) won't let me make unlimited overpayments until I change to the Standard Variable Rate (I think I've seen on these threads that other banks do let you do that).

Am I correct in saying that securing the fixed term in advance means I don't have any period on SVR and so I don't have an opportunity to make this big overpayment before I go onto the next deal?  Is this a drawback of fixing the rate so soon in advance, that you can't make a big overpayment without it counting towards your overpayment allowance?

Or is there a way around it?  Eg if my fixed rate ends on 31/12/2025 could I ask my new fixed rate to start from 02/01/2026 say and I would have to make bloody sure that I make that big overpayment on 01/01/2026?  It seems like there are risks with that, eg if there are bank delays or if I break my leg the day before for example.

Thanks in advance for any help

Hoenir

The 1st January every year is either a bank holiday or falls on a weekend. As a result not a working day. 

Newbie_John

Also depends what you call a big overpayment? As bank transfers/card payments come with limits of like £20k or so.
So probably better to ask for fixed to start a week later depending on the size of overpayment. 
Also, depending on the size.. you could do max for this year and max for next year (but check with bank when your allowance starts).

NorthernExpat

@Hoenir yes poor choice of example dates from me there. But if you replace the dates as dates in the middle of January say, I'm asking if that's how it would have to work

NorthernExpat

@Newbie_John Thank you - that's good to know. So depending on how big the amount is, I might have to allow enough days to spread the transactions over days, or else pay the fee for a larger transfer.

In principle do you agree the week gap would work - is that how everyone is planning it?

It must be something lots of people who are currently saving their overpayments into a pot need to think about. If you've got a few years left until your fix ends, you'd have an overpayment pot of multiple years Vs the last year overpayment allowance, if you go for a fix that starts immediately

Sounds like perhaps I should post on ask a broker - I'll do that. It's a big question for me because if I can't do the big overpayment at the end, I need to start overpaying now rather than saving separately.

Newbie_John

Definitely something to think about, although I don't think the time for overpayments is there yet - best ISA pays 5.5%, quick mortgage check shows you can get under 5% even with big banks - so better to keep cash.

Why can't you do the big overpayment at the end?