Advice on overpaying Nationwide mortgage - choosing overpayment option

Gpmanchester

Hi we currently have 10 years left on our 25 year  mortgage. We have a mortgage with the Nationwide- currently on  5 year fixed rate (4.09%)- this fixed rate ends in 3 years.

1.Reduce mortgage term
We are keen to pay this mortgage off 3/4 years early and intend to overpay as much as we can potentially up to the 10% overpayment limit (£20,000) each year. With the Nationwide you can opt for your overpayments to be treated in three different ways. 

1. Reduce the term

2. Reduce monthly payments 

3.Keep both the payments and term the same.

Up to now we have only been able to make a small overpayment each month and historically have had the overpayment option set as to keep both the payment and term the same. We definitely don't want to reduce the monthly payments and ultimately want to reduce the term. 

My recollection is that I had read on this forum years ago, some advice about what option to choose when making an overpayment but I can't recall the advise. We want to pay the least interest we can on this mortgage over the time we have left with on the mortgage, so ultimately paying the mortgage off in the quickest time possible. I don't know whether the advice was to keep the term and payments the same or whether it was to opt to reduce the term when making overpayments with the Nationwide.

I spoke to someone at the Nationwide by phone and whilst I know they can't advise they have actually confused me a little- as they warned that whatever overpayment option we choose now (we are about to make a £20,000 overpayment) that we can't change our mind in the future about how that particular overpayment amount is treated by the Nationwide.

I hope this query makes sense and someone can advise or direct me to a thread where this issue are addressed.

Very many thanks

Mark_d

To minimise the interest you pay you need to pay as much into the mortgage as you can.  So you don't want to reduce the payments.  You want the overpayments to mean you pay off the mortgage early ie. reduce the term.