Hey there! Ever thought about how great it would be to pay off your mortgage sooner and save a significant chunk of money on interest? Well, you're in the right place! Overpaying your Nationwide mortgage can be a super smart financial move, and this guide will walk you through exactly how to do it, step by step.
Ready to take control of your mortgage and potentially shave years off your repayment term? Let's dive in!
Making an Overpayment on Your Nationwide Mortgage: A Comprehensive Guide
Overpaying your mortgage means paying more than your required monthly payment. This extra money goes directly towards reducing your outstanding capital balance, which in turn reduces the total interest you'll pay over the life of your loan and can even shorten your mortgage term. Nationwide offers various ways to do this, giving you flexibility to suit your financial situation.
Step 1: Understand Your Mortgage & Overpayment Allowance
Before you make any overpayments, it's crucial to understand the specifics of your Nationwide mortgage. Did you know that most mortgages come with an annual overpayment allowance? Exceeding this limit can result in Early Repayment Charges (ERCs), which could negate any savings you hoped to achieve.
Sub-heading: Check Your Mortgage Offer & Annual Statement
- Your Mortgage Offer: This is your definitive guide. It will clearly state your overpayment allowance, typically expressed as a percentage of your outstanding balance (e.g., 10% per year).
- Your Annual Mortgage Statement: Nationwide sends out an annual statement that provides an update on your mortgage, including any applicable ERCs at the time it was issued. This can also help you track your progress.
- Nationwide Internet Bank/Banking App: The quickest way to get up-to-date information is by logging into your Nationwide Internet Bank or Banking App. You can usually find details about your overpayment allowance and potentially even an estimated ERC if you were to exceed it.
- Contact Nationwide: If in doubt, always contact Nationwide directly. Their customer service can clarify your specific terms and conditions.
Sub-heading: What are Early Repayment Charges (ERCs)?
An ERC is a fee charged by the lender if you repay more than your allowed overpayment amount within a specified period (usually during a fixed-rate or tracker-rate deal). These charges can be substantial, often a percentage of the amount repaid over your allowance. For example, if you have a 2% ERC and overpay £1,000 over your allowance, you'd pay a £20 charge.
Important Note: If you're on Nationwide's Standard Mortgage Rate (SMR), Base Mortgage Rate (BMR), or certain tracker products, you generally won't incur ERCs for overpayments.
Step 2: Calculate the Impact of Your Overpayment
Once you know your allowance, it's time to see the potential benefits! Nationwide provides tools to help you visualize how overpayments can impact your mortgage.
Sub-heading: Utilise Nationwide's Overpayment Calculator
Nationwide offers an
- How it works: You'll typically input your current mortgage balance, interest rate, remaining term, and then specify a regular monthly overpayment or a one-off lump sum.
- What it shows you: The calculator will estimate how much interest you could save and how much quicker you could pay off your mortgage. Remember, these are illustrations and don't account for future interest rate changes or specific ERCs, so always refer to your mortgage offer for exact terms.
Step 3: Choose Your Overpayment Method
Nationwide offers several convenient ways to make overpayments. Pick the one that best suits your banking habits.
Sub-heading: Online Banking (Nationwide Internet Bank)
This is often the easiest and quickest method if you bank with Nationwide.
- Log In: Access your Nationwide Internet Bank account.
- Navigate to "Move" or "Payments": Look for a "Move" tab or "Payments" section.
- Select "Make a single payment": Choose the option to make a single payment.
- Choose Your Accounts: Select the Nationwide account you want to pay from and then select your mortgage account as the recipient.
- Enter the Amount: Carefully enter the amount you wish to overpay.
- Review and Confirm: Double-check all the details before confirming the payment.
Sub-heading: Payments from Another Bank or Building Society
You can also make overpayments from an account held with another financial institution.
- Set up a New Payee: If you haven't paid Nationwide before, you'll need to set them up as a new payee in your online banking with the other bank.
- Account Type: Choose "personal account".
- Payee Name: Nationwide Building Society.
- Sort Code: 07-00-94
- Account Number: 44444445
- Payment Reference: Crucially, enter your mortgage account number here. This ensures the payment is correctly allocated to your mortgage.
- Make the Payment: Once the payee is set up, you can make a one-off payment or set up a standing order for regular overpayments.
Sub-heading: Direct Debit (for Regular Overpayments)
If you want to make consistent, regular overpayments, you can adjust your existing Direct Debit or set up a new one.
- Contact Nationwide: You'll typically need to contact Nationwide directly to amend your Direct Debit for a regular overpayment. They can guide you through the process and ensure it's set up correctly. This ensures the extra payment is consistently applied.
Sub-heading: Cheque or Cash at a Branch
For those who prefer traditional methods:
- Cheque: Make your cheque payable to "Nationwide Building Society."
- Remember: Write your mortgage account number on the back of the cheque.
- Include a covering letter: Clearly state that you intend this payment as an overpayment on your mortgage.
- Send to: Nationwide Building Society Mortgage Servicing Kings Park Road Moulton Park Northampton NN3 6NW
- Cash: Visit your local Nationwide branch. Be sure to have your mortgage account number ready.
Step 4: Confirm Your Overpayment Preference
This is a very important step! Nationwide gives you control over how your overpayments affect your mortgage. For single overpayments of £500 or more, they will automatically reduce your minimum monthly payments the following month unless you tell them otherwise.
Sub-heading: Choosing Your Overpayment Preference
You can tell Nationwide how you want your overpayment to be used to best suit your needs. Your options typically include:
- Reduce Monthly Payments: Your monthly payment will be recalculated, and you'll pay less each month, but the term might not reduce significantly. This provides flexibility if your financial situation changes.
- Reduce Term (excluding interest-only): This is often the most popular option as it aims to pay off your mortgage sooner and significantly reduce the total interest paid. Your monthly payments may stay the same or reduce slightly, but the end date of your mortgage will move forward.
- Keep Both Payments and Term the Same: Your overpayment simply reduces your outstanding capital. Your monthly payments and original term remain unchanged. This means the benefit will be realised as lower payments at a future recalibration point or upon a product switch.
How to change your preference: You can usually change or cancel your overpayment preference by logging into Nationwide's Mortgage Manager via their internet bank or banking app, or by calling them.
Step 5: Monitor and Review
Making overpayments isn't a "set it and forget it" task. Regularly monitoring your mortgage account is essential.
Sub-heading: Check Your Mortgage Statements
Your annual mortgage statement will reflect your overpayments and how they've impacted your balance and term (depending on your preference).
Sub-heading: Review Your Financial Situation
Life changes, and so might your ability to overpay. Regularly assess your financial situation to ensure overpaying remains the best use of your funds. Consider:
- Emergency Fund: Do you have a healthy emergency fund? It's generally wise to have 3-6 months' worth of essential expenses saved before aggressively overpaying.
- Other Debts: Do you have high-interest debts (like credit cards or personal loans)? It might be more financially beneficial to pay these off first.
- Other Investments: Are there other investment opportunities that could offer a better return than the interest saved on your mortgage? This is a personal decision and often depends on your risk tolerance and financial goals.
Related FAQ Questions
Here are 10 frequently asked questions about overpaying your Nationwide mortgage:
How to find my Nationwide mortgage account number?
You can find your Nationwide mortgage account number on your annual mortgage statement, within the internet bank (log in and view your mortgage account details), or in the Nationwide banking app.
How to know my Nationwide mortgage overpayment allowance?
Your overpayment allowance is detailed in your original mortgage offer document. You can also find information about it by logging into your Nationwide Internet Bank or Banking App, or by calling Nationwide's mortgage servicing team.
How to calculate the potential savings from Nationwide mortgage overpayments?
You can use Nationwide's online "Mortgage Overpayment Calculator" on their website. Simply input your mortgage details and the proposed overpayment amount to see estimated interest savings and term reductions.
How to make a one-off lump sum overpayment on my Nationwide mortgage online?
Log in to your Nationwide Internet Bank, go to the "Move" or "Payments" section, select "Make a single payment," choose your Nationwide current account as the source and your mortgage account as the destination, enter the amount, and confirm.
How to set up regular monthly overpayments on my Nationwide mortgage?
The most common way is to contact Nationwide's mortgage servicing team directly. They can help you amend your existing Direct Debit to include an additional regular overpayment amount.
How to ensure my Nationwide overpayment reduces my mortgage term, not just my monthly payments?
After making an overpayment (especially a lump sum of £500 or more), Nationwide may automatically reduce your monthly payments. You need to proactively tell them your preference to reduce the mortgage term. You can often do this via Mortgage Manager in the Internet Bank/App or by calling them.
How to check if I will be charged an Early Repayment Charge (ERC) for overpaying my Nationwide mortgage?
Refer to your mortgage offer document. You can also use Nationwide's online "Early Repayment Charge (ERC) calculator" for an estimate or contact their mortgage team for a precise figure based on your current product.
How to borrow back overpayments made on my Nationwide mortgage?
Nationwide offers an "overpayment reserve" for some mortgages (typically those taken out before March 2010). If your mortgage allows it, you may be able to borrow back previously overpaid funds by contacting Nationwide, often via phone.
How to get a redemption figure for my Nationwide mortgage?
You can obtain a redemption figure (the amount needed to pay off your mortgage in full) quickly through Nationwide's Mortgage Manager in their banking app or internet bank. Alternatively, you can call them.
How to contact Nationwide about my mortgage overpayment options?
You can call Nationwide's mortgage servicing team. Their contact number and operating hours are usually available on the "Mortgages help" or "Contact us" sections of their official website.
