Overpaying on Nationwide Mortgage

MoneyMac

Hi

I have been making odd smallish overpayments over the last year (hoping to up them this year). Our mortgage is a fixed rate with Nationwide and we are allowed to make overpayments of £500 per month. I make these overpayments online and they show on my mortgage account as payment received and the balance reduces by that amount along with the normal monthly payment. Does anyone know if Nationwide let you have these overpayments back if needed (not that we want to as we would like to be mortgage free as quickly as possible) and also how much do you have to overpay to see a decrease in the daily interest charged? I know the balance reduces but the whole point of overpaying is to try and pay as little interest as possible.

Many thanks

cellsuit

I used to make overpayments and when I needed a payment holiday of 3 months they were not interested, so I cancelled my direct debit and just pay at the counter whenever they send me a letter telling me I am behind with my payments. You can get up to 2 months behind and they do not charge a late payment fee and it will not affect your credit rating.

Daft_Pegasus

I thought that with Nationwide it was possible to get access to the overpayments you'd made although I admit I never tried to invoke that with them.

In terms of reducing the interest you need to pay in a figure over £500 (which you're not allowed to do under the terms of the mortgage), basically you need to wait until the tie-in period has finished.

Bonbon

I have a Nationwide interest only mortgage. I make £500 overpayments every month because that is the maximum allowed without penalty. A few days later I always receive a letter with my new reduced monthly payment. So to answer your question, the £500 does reduce the interest. If you overpay less than £500 it doesn't count and I presume it sits 'somewhere' until the amount reaches £500.....hope that makes some sort of sense.

financialbliss

Hi moneymac.

As I have one myself, for some info on Nationwide mortgages see my mortgage free diary - page 4 - post #71.

As far as I know, any overpayment is taken off the capital, therefore it will reduce the interest you are charged. Needless to say, larger overpayments will result in less interest being charged, but all overpayments should have some effect.

See this page from Nationwide regarding their flexible features:

http://www.nationwide.co.uk/mortgage/remortgage/flexfeats.htm

Think I've read somewhere that getting overpayments back takes around 5 working days, but I could be wrong here. This is something I've not done personally.

Also, if you've internet banking, you could always keep a daily balance of your mortgage for a few days in order to work out your daily balance, make an overpayment and once this has cleared to the mortgage, do the same again and you can see the difference in daily interest.

I'm currently being charged about 9.12 a day in interest on my mortgage.

@bonbon, overpaying by less than 500 doesn't reduce your monthly payment, but as far as I know, the overpayment will still reduce capital, thus reducing interest.

If you're serious about clearing your mortgage, you should really be keeping the monthly payment the same and reducing the term as overpaying then allowing your monthly payment to reduce for the rest of the term doesn't actually reduce the term.

Hope this helps...

FB.

doodle_bug

Don't forget if you have more than one mortgage account at the Nationwide you can pay £500 off each of them. For every £500 you over pay you are likely to see around 8p reduction in the interest each day, you do notice it after a while.

SPL

hi

we too have a Nationwide nmortgage and have been overpaying regularly each month - our adviser has reassured us that we can access the money anytime we want

we have also been told can have a payment holiday anytime we want also but have never tried to access it so i dont know if it does become difficult when you actually apply as the other poster said

MoneyMac

Thanks guys for all your replies, thats made things clear for me and i know where to go with it now, mainly want to clear the mortgage as quickly as possible paying as little interest as possible.

Many thanks

fagun

By default, Nationwide reduces the monthly payment for overpayments, but you can ask them to reduce the mortgage period instead, which means that you are actually overpaying a bit more.

Also, you are allowed to overpay as much as you like in the final month of a deal (either base rate tracker or fixed rate).

tsharp

Within the set period of a deal, i doubt the monthly payments will go down, but as the capital has been reduced, overall interest must have been reduced, surely?

tanith

I was asked wether I wanted a decrease in the interest rate or the term to come down when I made an overpayment enquiry