Mortgage overpayments to more than one mortgage account

aliportico

We have a mortgage with Nationwide of about 46K, and also 2 "Further Advances" of about 32K and 40K each. All are fixed rate atm, at 5.68 and 5.69%, and all finish in July 2021.

We can overpay by £500 a month, and have been told by our Nationwide mortgage advisor that this means £500 per month per account, so theoretically we could overpay by £1500 a month, In practice, this won't happen!

Anyway, we are now in a position to pay off about £200-300 a month. We are wondering whether it is best to concentrate on one mortgage account at a time, e.g. getting the smallest one completely paid off first, or whether it would be best to pay an equal amount to each each month, or pay the £200 to each in turn.

I've been fiddling with mortgage calculators, but I can't quite grasp it well enough to decide for sure! If we overpaid the smallest account by £200 a month, it would be paid off in 6y 8m. But I can't work out what sort of position we'd be in with regard to the other two accounts after that. Treating the whole 118K debt as a whole, and overpaying by £200 a month says it would be paid off in 10y 7m.

Any advice?

melvis

If you can definitely afford the £200 each month, you may wish to ask them to reduce the term so that your payments are approx £200 more each month. This would leave you free to pay the maximum overpayment should you be lucky and come across some extra cash in the future.

As for which one to pay off, as they are all on simliar interest rates I don't see that it would make much difference which one you chose. If you do focus on one loan though, remember when it is paid off to change your payments with Nationwide as they will automatically just collect less money from you as you will only have 2 loans left.