Mortgage overpayments help

[Legofan70]

I’ve been overpaying my nationwide mortgage by £200 every month for the past 6 months. Now I have a total overpayment reserve of £487. What does this mean? Also states that We will recalculate your contractual payments when you make an overpayment of £500 or more. Obviously overpaid more than this but payments haven’t changed. Any insight would be good.

You can over pay a certain amount each month/year but if you go over the maximum allowed, they may charge you part of an early repayment fee and then recalculate your monthly payments. For many lenders it’s a maximum of 10% per year, for mine it’s anything less than 3 times the monthly payment. You will need to look at your small print and check when your year runs from. Has some of the last 6 months gone into last year and some into this year? My year starts in August each year.

Your overpayment total is kind of held separately to your actual mortgage, they know you’ve paid it, and when you come to, for example, the end of your fixed rate, you have to specify that is to be taken off the term or they may well use it to reduce the overall amount and reduce your monthly payments going forward, but keep the actual term of your mortgage the same.

Chatgpt can be helpful with this, you can screen shot and upload your contract and it will break it down and fully explain your contract to you.

Banks tend to have 3 options with mortgage overpayments: reduce the term, keep term same and reduce payments or you can build a reserve so if you need to, you can claim back. Ring them directly

@Legofan70 its £500 in a single payment so not in total. Depending where you are in the month your overpayment amount will also change. Ie day you pay your monthly payment you’ll probably have £1200 in the reserve whereas day before next payment is due much less.
Nationwide overpayment allowance on our mortgage is 10% a year of the initial mortgage. This doesn’t reduce annually on ours.
Hope this all makes sense.

Yeah it’s 10% but the overpayment is well below that.
the year runs from Oct so would be between 2 years.

Have you set in your overpayments how you want the overpayment to apply? You get 3 options in the nationwide mortgage manager - reduce the term, reduce future payments or keep the term and payments the same (in which case it just hold the overpayment until you next renew your mortgage or ask them to do something with it)