end of term/renewal overpayment (nationwide)

Poor_Leno

So, i'm coming to the end of my 2 year fix with Nationwide in March and its only now i can start planning the next term since they only allow renewal from 4 months before the end date.  What I'd like to do is make a single lump payment when I do my renewal to take me under the 60% LTV threshold.  To do that I need to pay slightly above the 10% permissable for annual overpayment. 

My question is, will they let me reduce the debt from the balance (without adjusting the term remaining) at the point I want to renew?  there's no option for this on the mortgage manager online, you can only make an overpayment either monthly or singular up to 10% of the original loan.   Would they let me pay more if I ring them and ask to simply reduce the debt at the same time I renew for a new deal? 

Before anyone mentions about investing this money instead, it suits me in the here and now to get down to lower monthly repayments, rather than keep them at what they are.  I've reduced down to a 4 day working week and really enjoying having the extra day, which only came about due to a hernia operation and then a return to work reduced hours, but I don't have any intention to go back to 5 really so it just would suit me to get the repayments down by £200 a month, which i can achieve with a single lump payment since I took this deal out in the aftermath of trussonomics and higher rates.  As long as doing this doesn't incur a penalty charge of course.  Most banks allow this at the end of term but I can't see Nationwide offering it on their mortgage manager pages, so I am also sceptical as to whether they do!

Woodstok2000

It's definitely possible - it may just need a couple of steps.  If you don't renew your mortgage fix, you automatically go onto the standard variable rate and there's no overpayment limit on SVR mortgages, so in the worst case scenario you just need to leave a gap (ideally 30 minutes or so!) between the old and new mortgages when you make the overpayment.

We remortgaged through a broker doing this, and they sorted it all out for us and it went seamlessly.  If you're not using a broker you'd be best to speak to Nationwide - it must be a common occurrence so I'm sure they'll have a procedure.

Poor_Leno

Yeah i did read somewhere else about letting it  expire to the SVR, but i'd raher not do that, obviously.  Its a shame the overpayments are not calendar year rather than a year based on when it was taken out, would have made life a bit easier.

I will ring and ask them, thanks. 

BikingBud

Poor_Leno said:

So, i'm coming to the end of my 2 year fix with Nationwide in March and its only now i can start planning the next term since they only allow renewal from 4 months before the end date.  What I'd like to do is make a single lump payment when I do my renewal to take me under the 60% LTV threshold.  To do that I need to pay slightly above the 10% permissable for annual overpayment. 

My question is, will they let me reduce the debt from the balance (without adjusting the term remaining) at the point I want to renew?  there's no option for this on the mortgage manager online, you can only make an overpayment either monthly or singular up to 10% of the original loan.   Would they let me pay more if I ring them and ask to simply reduce the debt at the same time I renew for a new deal? 

Before anyone mentions about investing this money instead, it suits me in the here and now to get down to lower monthly repayments, rather than keep them at what they are.  I've reduced down to a 4 day working week and really enjoying having the extra day, which only came about due to a hernia operation and then a return to work reduced hours, but I don't have any intention to go back to 5 really so it just would suit me to get the repayments down by £200 a month, which i can achieve with a single lump payment since I took this deal out in the aftermath of trussonomics and higher rates.  As long as doing this doesn't incur a penalty charge of course.  Most banks allow this at the end of term but I can't see Nationwide offering it on their mortgage manager pages, so I am also sceptical as to whether they do!

In amongst all the money saving mayhem and ensuring you reduce your liabilities it is sometimes forgotten that life must be lived.

£200 monthly payment saving is £250 that you do not need to earn, PAYE @20%.

Good on you for being aware enough to consider quality of life.

You should be able to contribute a lump sum on completion of current fixed rate period and before commencement of the next, it simply calculates against the reduced capital sum.

Newbie_John

All really down to numbers that you haven't provided.
Depending on them you could either:
1) move to SVR, repay and then switch to fixed
2) put money to savings account/ ISA, if your mortgage rate is 4% and your savings rate is 4% then it really works out the same way financially, interests earned = interests saved
3) consider remortgage to a provider like first bank which allows unlimited overpayments
4) take shortest fixed period now, put money to savings and repay in chunks and in 2 years time you could easily hit that 60% LTV one

So use some online mortgage calculator and put actual numbers in place and see what's the cheapest option.

Yorkie1

Newbie_John said:

All really down to numbers that you haven't provided.
Depending on them you could either:
1) move to SVR, repay and then switch to fixed
2) put money to savings account/ ISA, if your mortgage rate is 4% and your savings rate is 4% then it really works out the same way financially, interests earned = interests saved
3) consider remortgage to a provider like first bank which allows unlimited overpayments
4) take shortest fixed period now, put money to savings and repay in chunks and in 2 years time you could easily hit that 60% LTV one

So use some online mortgage calculator and put actual numbers in place and see what's the cheapest option.

Unless you are taxed on your savings interest, of course. In which case you need a higher savings rate to match paying the mortgage

Woodstok2000

Poor_Leno said:

Yeah i did read somewhere else about letting it  expire to the SVR, but i'd raher not do that, obviously.  Its a shame the overpayments are not calendar year rather than a year based on when it was taken out, would have made life a bit easier.

I will ring and ask them, thanks. 

There's really no harm in letting it go to SVR for a day - any difference in the interest rates will be minimal for that short a time period.  Mortgage offers tend to be valid for 3 months (minimum), so you can get everything locked in ahead of time and just need to make the overpayment on schedule...