Overpaying mortgage monthly or yearly?

Overpaying mortgage monthly or yearly?

Author
Discussion

leemarkadams

Original Poster:

852 posts

214 months

Wednesday 1st October 2014
quotequote all
Hello all, in the fortunate position to be able to save a lump of cash each month and we are looking to overpay the mortgage, our mortgage company allow us to overpay as much as we want as many times as we want.

So, the thing is do we overpay at the end of each month, or do we overpay just once every 6 months or so (just in case we need the saved money for some reason).

Now I am thinking of paying a lump sum each month but is that correct?

Thanks

Lee

Sarnie

8,025 posts

208 months

Wednesday 1st October 2014
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I do it monthly..........stops me spending it on cars!!

vescaegg

25,489 posts

166 months

Wednesday 1st October 2014
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Sarnie, I want to set up a monthly overpayment, can you advise on how to go about it with Nationwide? I want it to reduce my term not the monthly payments. Person I spoke to at Nationwide didnt seem to understand this!

Ean218

1,959 posts

249 months

Wednesday 1st October 2014
quotequote all
vescaegg said:
Sarnie, I want to set up a monthly overpayment, can you advise on how to go about it with Nationwide? I want it to reduce my term not the monthly payments. Person I spoke to at Nationwide didnt seem to understand this!
It's one of the standards option on their on-line banking website:

Nationwide said:
Overpaying by £500 or more:

I want to:

Pay off my mortgage earlier by reducing my mortgage term

Reduce my future monthly payments

Keep my existing payment and term as-is. (At the next natural mortgage payment change, i.e. interest rate change, my payment will be automatically recalculated).
Once that's set all future overpayments are dealt with in that way. Very surprised a Nationwide bod didn't understand, they are normally very good.

Sarnie

8,025 posts

208 months

Wednesday 1st October 2014
quotequote all
Ean218 said:
vescaegg said:
Sarnie, I want to set up a monthly overpayment, can you advise on how to go about it with Nationwide? I want it to reduce my term not the monthly payments. Person I spoke to at Nationwide didnt seem to understand this!
It's one of the standards option on their on-line banking website:

Nationwide said:
Overpaying by £500 or more:

I want to:

Pay off my mortgage earlier by reducing my mortgage term

Reduce my future monthly payments

Keep my existing payment and term as-is. (At the next natural mortgage payment change, i.e. interest rate change, my payment will be automatically recalculated).
Once that's set all future overpayments are dealt with in that way. Very surprised a Nationwide bod didn't understand, they are normally very good.
^This.

Do you want a job? biggrin

vescaegg

25,489 posts

166 months

Wednesday 1st October 2014
quotequote all
Sarnie said:
Ean218 said:
vescaegg said:
Sarnie, I want to set up a monthly overpayment, can you advise on how to go about it with Nationwide? I want it to reduce my term not the monthly payments. Person I spoke to at Nationwide didnt seem to understand this!
It's one of the standards option on their on-line banking website:

Nationwide said:
Overpaying by £500 or more:

I want to:

Pay off my mortgage earlier by reducing my mortgage term

Reduce my future monthly payments

Keep my existing payment and term as-is. (At the next natural mortgage payment change, i.e. interest rate change, my payment will be automatically recalculated).
Once that's set all future overpayments are dealt with in that way. Very surprised a Nationwide bod didn't understand, they are normally very good.
^This.

Do you want a job? biggrin
In fairness it was a person in a branch which may not have been the best approach.

Ill speak to them properly now hehe

I take it I can do a separate standing order to them each month?

FiF

43,960 posts

250 months

Wednesday 1st October 2014
quotequote all
To me it seems that with Nationwide it's best to overpay regularly due to the way the balance and interest is calculated.

Didn't know about overpayment also meaning you can borrow back or underpay if you need some flexibility.

When we had a mortgage albeit not with them it was clearly best to put the over payments into a savings account so we got some earnings through the year and just before the annual day of reckoning make a single capital repayment. Due to the archaic way that outfit worked.

Ean218

1,959 posts

249 months

Wednesday 1st October 2014
quotequote all
FiF said:
To me it seems that with Nationwide it's best to overpay regularly due to the way the balance and interest is calculated.

Didn't know about overpayment also meaning you can borrow back or underpay if you need some flexibility.
The only reason I know about it is because we have done just that.

We overpaid for the last 10 years, then drew back down most of the overpayments for an extension 2 years ago and are now overpaying again. And yes, Nationwide calculate interest daily so monthly overpayments are best.

As far as the machanics are concerned, if you have NW online banking you can just move money into the mortgage account whenever you want, like I just did this morning.

scottri

950 posts

181 months

Wednesday 1st October 2014
quotequote all
Nationwide will also arrange to collect the overpayment automatically. I just rang and asked them to collect an extra amount every month; which they now collect on top of whatever the normal payment is. I prefer it this way as it means i don't have to go and do it myself each month and it becomes the norm. Its also nice knowing i am building up a overpayment pot for the future.

Another point to note is that over payments doesn't affect the LTV rate - if you want that to happen you have to write to them and ask for the over payments to be transferred off the 'proper' balance. Which i assume means that you can't draw down on it in future.

Edited by scottri on Wednesday 1st October 10:59

Patch1875

4,893 posts

131 months

Wednesday 1st October 2014
quotequote all
scottri said:
Nationwide will also arrange to collect the overpayment automatically. I just rang and asked them to collect an extra amount every month; which they now collect on top of whatever the normal payment is. I prefer it this way as it means i don't have to go and do it myself each month and it becomes the norm. Its also nice knowing i am building up a overpayment pot for the future.

Another point to note is that over payments doesn't affect the LTV rate - if you want that to happen you have to write to them and ask for the over payments to be transferred off the 'proper' balance. Which i assume means that you can't draw down on it in future.

Edited by scottri on Wednesday 1st October 10:59
I've been overpaying my nationwide mortgage for a few years now it shows on the statement as a separate amount, so is my outstanding balance including this?

Patch1875

4,893 posts

131 months

Wednesday 1st October 2014
quotequote all
Patch1875 said:
scottri said:
Nationwide will also arrange to collect the overpayment automatically. I just rang and asked them to collect an extra amount every month; which they now collect on top of whatever the normal payment is. I prefer it this way as it means i don't have to go and do it myself each month and it becomes the norm. Its also nice knowing i am building up a overpayment pot for the future.

Another point to note is that over payments doesn't affect the LTV rate - if you want that to happen you have to write to them and ask for the over payments to be transferred off the 'proper' balance. Which i assume means that you can't draw down on it in future.

Edited by scottri on Wednesday 1st October 10:59
I've been overpaying my nationwide mortgage for a few years now it shows on the statement as a separate amount, so is my outstanding balance including this?
Sorry ignore this it does.

anonymous-user

53 months

Wednesday 1st October 2014
quotequote all
I do this with my Nationwide mortgage, best set up as a separate standing order to the DD used for the main payment. Tried to get them to add an extra amount every month but when rates changed the overpayment also changed hence the separation.

vescaegg

25,489 posts

166 months

Wednesday 1st October 2014
quotequote all
I've just registered with nationwide so I can manage my mortgage online. Hopefully it's fairly straightforward to transfer funds across once on there I don't bank with nationwide but hope it's still easy.

yellowjack

17,065 posts

165 months

Wednesday 1st October 2014
quotequote all
gottans said:
I do this with my Nationwide mortgage, best set up as a separate standing order to the DD used for the main payment. Tried to get them to add an extra amount every month but when rates changed the overpayment also changed hence the separation.
This is what I do. A Direct Debit takes care of the main payment, which will vary with the interest rate, then an extra £150 a month by Standing Order into the mortgage account. I set this amount, and can vary or cancel/suspend it via my current account (different bank). I've done it for ages now, and it's made quite a difference to the amount still owing. It also gives me a £150 cushion if/when the rates rise. As my repayments increase, I can drop the overpayment, if needed, by the same amount, but my net mortgage cost would remain the same. I'll try to keep overpaying, though, as it makes more financial sense than putting the cash into a savings account with some wretchedly low return.