Newbie with Nationwide mortgage

moneysavingwannabe

Hi,

I have been overpaying on my mortgage for a while but only small amounts.

Have a fixed rate with Nationwide. Do small amounts make any difference as term is not reducing, would I be best to save £500 and then pay that off??

Any help on best way to approach overpaying would be gratefully received!!

Mortgage £55,698.23 agreed payment date July 2026 5.49%

Currently overpaying £89 a month hoping to up it to £239 to round mortgage up to £650.

dimbo61

hi MSW
every penny will make a difference so why save up to overpay £500!
this i think is the max you can overpay in any one month.
So carry on with the good work and overpay as much as you can afford
each month. the overpayment is credited to your mortgage as soon as
you pay it in. this reduces your mortgage balance by that amount and you stop paying interest on your overpayment.
next year when you get your statement it will show all your overpayments
and the reduction in your mortgage payment IF you want to keep the
same term. IF you can afford the mortgage payments then ask to stick with your regular payments and this will knock years off the term and save you
thousands of pounds in interest. KEEP UP THE GOOD WORK
PS dont forget to also have an emergency fund in ISA,s 6 months worth of
income for rainy days

moneysavingwannabe

Hi,

Thanks for your reply. Will keep trying to make the overpayments!!:T

The fixed mortgage ends July 2009 so I suppose we reassess then and apply for a mortgage with a shorter term??

Once my debts are paid off I suppose I could overpay the maximum each month and try and save more to pay a lump sum off before we take out a new mortgage?? Not sure what the rates are like at the moment but I suppose the more I can pay off the better??!!

Thanks again

MSW

[Deleted User]

Hi moneysavingwannabe,

We've been with Nationwide for a little over five years and yes, you can apply for a mortgage with a shorter term once your fixed period ends. How short a term you go for is up to you, but don't overcommit, obviously. Hopefully come July 2009 they'll have some mortgage products worth having...!

As far as overpayments are concerned, sure you won't get a letter saying your term has been reduced if you pay less than £500 in a given month, but it still counts towards reducing your capital borrowing, so it's still worth paying something extra.

If you have outstanding debt, though, you may want to pay that off first as you may be paying higher levels of interest on that than on the mortgage. (Assuming it's not interest-free at the moment, that is.) However it depends on the type of borrowing: credit cards are pretty flexible and "easy" to pay off, but some loans carry some hefty penalties for paying them off early. (Even on that, though, it may be worth examining if you'd end up paying less in fees than you would in interest over the term of the loan.)

clarew

as i am currently on maternity leave, where i was paying around £100+ amonth overpayment to nationwide, i have cut back to £23. May only seem a little amount but will still make some difference and keep me in the overpayment habit.

every penny overpayed makes a difference in my mind!

moneysavingwannabe

Hi,

Thanks for your replies.

The debt is currently on a 0% cc and we hope to pay that off by December before the offer runs out. So interest isn't a problem.

Although we are trying to get another 0% for a year to put wedding costs on and then pay that off before the 0% runs out. :eek:

My OH has just finished paying for his car so we thought we could put the extra £150 into the mortgage as we are not used to having it anyway!!

Congrats clarew on the baby, you are doing well to pay extra with a new baby my sister is on maternity leave and they have reduced the overpayments.

Thanks again everyone! :T

financialbliss

Hi,

Had a quick read thru this thread and thought it may be useful to point out that even when you've a fixed rate mortgage with nationwide, you can alter the term.

I'm fixed @ 4.79% until March 2011 and I've altered (shortened) my term three times - the net result being that previously I was paying 479.80 - first term alteration to 543.80, then 597.31, now 898.03.

I can still overpay by 500.00 per month without penalty.

See my diary - post #71 on page 4...
http://forums.moneysavingexpert.com/showpost.html?p=6933255&postcount=71

Oh, there's also no charge for this, so no need to wait until 2009 !

Hope this helps...

FB.

Snazzy

Have you made sure you've told Nationwide you want the overpayments to reduce the term rather than reduce your monthly payment? The latter is their default position.

As Marvin said, you only get a letter with the new term on when you make the maximum £500 overpayment, otherwise you'll just have to wait for the annual statement to see the impact your overpayments have had. For info, my mortgage is almost identical to yours and every £500 overpayment is knocking 3 or 4 months off the term.

Have you been making the most of your ISA allowance. I find I can beat the 5.49% mortgage interest rate so try to fill up my ISA first before overpaying the mortgage. The interest earned on the ISA is worth more than the interest saved on the mortgage.

[Deleted User]

Snazzy wrote: »

Have you made sure you've told Nationwide you want the overpayments to reduce the term rather than reduce your monthly payment? The latter is their default position.

Good point; I forgot that!

moneysavingwannabe

Hi everyone,

Thankyou very much for all your replies, I will look into reducing the term, do you need to tell them how much to reduce it by or will they give me some figures?

I did tell Nationwide to reduce the term once although cos only ever made on payment of £500 not seen this plus not sure it is showing that on the online statement.

Thankyou again :T

moneysavingwannabe

Hmmmm,

I'm now slightly depressed!

Just logged on to check mortgage account to find in 6 days the interest owed has gone up over £50 and now owe even more!

I must be very naive I like logging onto savings accounts to check the interest but I'm not used to it going the other way. I suppose I never really thought about the amount of interest that was being charged every day! I think I may have just had my lightbulb moment!!