Overpay mortgage to maximum

I have a mortgage with Nationwide where I am allowed to overpay by 10% of the original borrowed amount each year.

In my account there is an option to choose whether my monthly payment amount is recalculated and reduced each time I make an overpayment.  At the moment the option is selected to keep the payments the same and not reduce them.

If I make a lump sum payment of the maximum annual overpayment allowed, am I right in thinking that I need to change the option to reduce my monthly payments, otherwise I will start paying penalties when there is an overpayment against each monthly payment after that point?

Comments

  • Brie
    Brie Posts: 9,208
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    My understanding is that the 10% is on top of whatever your normal payments would be so you don't have to reduce them each year and really benefit from paying less interest over the long term.  

    Then again I wouldn't take anyone here's word on this and would get confirmation, in writing, from nationwide.
    "Never retract, never explain, never apologise; get things done and let them howl.”
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