Nationwide Mortgage

pollyanna24

I have just refixed with Nationwide, but just have a few queries on the mortgage before I decide whether or not to use my savings to make overpayments each month. I have sent what is below as an e-mail to them, but just wondered if anyone here was able to answer any/all of the questions quicker than Nationwide might get back to me.

"Dear Sirs

We have just taken out a new mortgage product with your company which is a five year fixed mortgage starting on 1st May 2008 and ending on 30th April 2013.

I have a few enquiries regarding this mortgage.

If we overpay during the fixed rate period, can we ask for the monthly payment to be reduced due to these overpayments? Or do we have to wait until the end of the fixed period for this to take effect?

Are we allowed to change to an interest only mortgage during the five year fixed rate?

Are we allowed to take a mortgage payment holiday during the five year fixed period?

Finally, regarding the redemption penalty that will be enforced if we pay off the mortgage before the five year fixed period is ended, is this a fixed amount or does the amount go down depending on how much longer there is left of the fixed period?"

Gailk

We are also swapping to Nationwide - on the KFI it has a section with all of the information on re holidays\overpayments etc.
Have you looked there?

pollyanna24

Hiya.

Thanks for that. I have looked through all the information that we have been sent, but couldn't anything specific to the questions I have asked them. Hopefully they will get back to us quite quickly.

I know you can take holidays and make overpayments, I just don't know how strict they are if you are re my questions re being in a fixed rate mortgage rather than on SVR.

We have money to overpay, but just don't want to use it for that in case we can't reduce our payments if we need to in the future.

glitzy

Hi im not brilliant at mortgages, but have re-mortgaged a few times so know a little - if you have a mortgage break you have to pay back the amount by the end of the year Dec (xmas time i never have any spare cash). in the fixed part of your deal if you want to lower your payments it would be like a brand new mortgage so you would then have to pay a redemption fee - but the redemption fee does go down as the years go on. how about putting your spare cash into savings & when you know you dont need it pay off some of your mortgage like a lump sum ( upto 10% ). hope this is clear, good luckx

Gailk

On our KFI I'm sure it says that you can "borrow back" overpayments or take a payment holiday as long as at the end of the holiday you are not over 85% LTV.

Lurking_Lawyer

I have a Nationwide mortgage and have just re-fixed as a chunk of it was coming to the end of its fixed rate.

The Key Facts Illustration I was sent to sign and return explained that you can have a mortgage "holiday" of 3 to 12 months on a fixed rate as long as you have held your account with them for 12 months and haven't missed a payment (from memory).

You can overpay on each account you hold by £500/month without incurring any early repayment charges. Depending on the level of repayment, at the end of the year they will ask you whether you want to maintain the repayment levels and shortern the term or reduce your monthly repayments but stick to the existing term,

We paid off a chunk of around £30K when we sold my wife's house (albeit we had kept part of the mortgage on SVR to avoid any early repayment charges) and our statement shows an overpayment reserve of around £30K that we can "re-borrow" if needed - although I suspect that they would want to assess affordability before re-lending it to us.

Woby_Tide

pollyanna24 wrote: »

If we overpay during the fixed rate period, can we ask for the monthly payment to be reduced due to these overpayments? Or do we have to wait until the end of the fixed period for this to take effect?

Long time since we overpaid but the first time we did within a couple of months we got a letter detailing new reduced monthly payment. We contacted them that we wanted term reducing and that was noted on teh account or something and applied to all future overpayments

pollyanna24 wrote: »

Are we allowed to take a mortgage payment holiday during the five year fixed period?

Someone already explained the main part of this, one bit we were told by nationwide advisor though was that if you do chose to take one, it may be better to take the 12 month one, once you take a 3 month one, thats it, you can't then extend if you need to until a further 12 months have passed. If you take 12 months you can end it early though.

pollyanna24 wrote: »

Finally, regarding the redemption penalty that will be enforced if we pay off the mortgage before the five year fixed period is ended, is this a fixed amount or does the amount go down depending on how much longer there is left of the fixed period?"

check your Key facts but likely to be 3% flat rate regardless of term left

Lurking_Lawyer

Woby_Tide wrote: »

check your Key facts but likely to be 3% flat rate regardless of term left

For the 5 year fix we signed up to last week with Nationwide, it was indeed 3% of the loan amount, irrespective of when it was made.

pollyanna24

Thanks for that everyone.

I knew payment holiday were part of Nationwide mortgage, but I just wondered if you could do it while in a fix or if you were restricted when you were in a fixed rate.

I asked about the overpayment part because for almost a year when we got the mortgage, we overpaid about £100 a month (granted, I know £1,000 isn't a lot in the grant scheme of things) and nothing happened (besides the mortgage balance going down of course). No letter from Nationwide or anything. Payments stayed the same. In our statement, it does mention that we have a overpayment reserve of this amount though, but I just wondered if we would be making the overpayments, then maybe in 3 or so years' time, find that we need extra cash, and ask for the overpayments to be taken into account and reduce the monthly payment, we might be told that we have to wait till the 5 years is up before they can do anything.

And the final part was the early redemption penalty. We had a Nationwide mortgage a few ago now (on a different house) and when we tried getting out of the mortgage, there was some formula to work out the decreasing amount of penalty as it depended on how much longer of the fixed period was to run as to how much the penalty was.

Lurking_Lawyer

pollyanna24 wrote: »

And the final part was the early redemption penalty. We had a Nationwide mortgage a few ago now (on a different house) and when we tried getting out of the mortgage, there was some formula to work out the decreasing amount of penalty as it depended on how much longer of the fixed period was to run as to how much the penalty was.

Yup, that's the way it used to work - in previous years when we had 2 and 3 year fixes, it was on a sliding scale: 3% in the first year, 2% in the second year and 1% in the final year etc.

I'm guessing that they've now taken the opportunity to screw a few more pounds out of their borrowers by upping their fees as well as their rates.....

Woby_Tide

pollyanna24 wrote: »

I asked about the overpayment part because for almost a year when we got the mortgage, we overpaid about £100 a month (granted, I know £1,000 isn't a lot in the grant scheme of things) and nothing happened (besides the mortgage balance going down of course). No letter from Nationwide or anything. Payments stayed the same. In our statement, it does mention that we have a overpayment reserve of this amount though, but I just wondered if we would be making the overpayments, then maybe in 3 or so years' time, find that we need extra cash, and ask for the overpayments to be taken into account and reduce the monthly payment, we might be told that we have to wait till the 5 years is up before they can do anything.

We last made overpayments on our first deal with nationwide about 5 years ago when we were on a tracker, had about £5k of them. Since then we switched to a 2 year fixed with them. We moved house about 18 months into that fix and withdrew the overpayments at that point, the funds were released at the rate of our then current fix. I think as long as you retain a mortgage account with Nationwide the overpayment reserve always remains. If you leave or it gets closed I would guess is main way it will cease to be. Worth waiting for them to confirm it as this was a couple of years back(before they changed all teh early repayment options). Also it was very quick to get the funds if need be, we did it over phone then faxed in signature and letter and the funds were in our flexaccount within 48 hours.