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You can find the current article at its original source at http://www.guardian.co.uk/money/2013/jun/08/nationwide-mortgage-overpayment-rules
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| Nationwide's mortgage overpayment rules exclude loyal borrowers | Nationwide's mortgage overpayment rules exclude loyal borrowers |
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| Nationwide has increased the amount borrowers can overpay on their mortgages, but only for new customers – prompting anger among some existing home-loan holders. One described the move as a "kick in the teeth" for loyal customers. | Nationwide has increased the amount borrowers can overpay on their mortgages, but only for new customers – prompting anger among some existing home-loan holders. One described the move as a "kick in the teeth" for loyal customers. |
| Britain's biggest building society has changed its rules so borrowers will be able to overpay up to 10% of their mortgage every year without being hit with an early repayment penalty. This means some will be able to repay their mortgage much more quickly than they had anticipated. | Britain's biggest building society has changed its rules so borrowers will be able to overpay up to 10% of their mortgage every year without being hit with an early repayment penalty. This means some will be able to repay their mortgage much more quickly than they had anticipated. |
| But the change only applies to mortgages reserved from 29 May. Those with existing Nationwide mortgages will continue to have their overpayments capped at £500 a month. | But the change only applies to mortgages reserved from 29 May. Those with existing Nationwide mortgages will continue to have their overpayments capped at £500 a month. |
| Rachel Wait, 32, is furious that she is unable to take advantage of the new rules. Wait, a journalist, and her husband own a three-bed house in Walton-on-Thames, Surrey, and pay £930 a month for a £160,000 Nationwide repayment mortgage fixed for five years at 4.39%. | Rachel Wait, 32, is furious that she is unable to take advantage of the new rules. Wait, a journalist, and her husband own a three-bed house in Walton-on-Thames, Surrey, and pay £930 a month for a £160,000 Nationwide repayment mortgage fixed for five years at 4.39%. |
| "This was taken out in July 2011, so we've got another three years to go," she says. "I find it really frustrating that we're locked into this deal, with particularly high early repayment charges at 5% for its duration, so we'd pay a fortune to pay off the mortgage early." After taking out the loan, the couple inherited some money. "The solution is to overpay, but this has been capped at £500 a month, so I got excited when I saw Nationwide was upping this to 10% a year – but it turns out this is only for new customers," Wait says. "It feels like a kick in the teeth, particularly when their slogan is that they're 'on your side'." | "This was taken out in July 2011, so we've got another three years to go," she says. "I find it really frustrating that we're locked into this deal, with particularly high early repayment charges at 5% for its duration, so we'd pay a fortune to pay off the mortgage early." After taking out the loan, the couple inherited some money. "The solution is to overpay, but this has been capped at £500 a month, so I got excited when I saw Nationwide was upping this to 10% a year – but it turns out this is only for new customers," Wait says. "It feels like a kick in the teeth, particularly when their slogan is that they're 'on your side'." |
| A Nationwide spokeswoman confirmed there were no plans to change the rules for existing mortgages. She said that in making the move, the society had "listened to broker feedback", and that the change had been largely welcomed. | A Nationwide spokeswoman confirmed there were no plans to change the rules for existing mortgages. She said that in making the move, the society had "listened to broker feedback", and that the change had been largely welcomed. |
| The ability to overpay by 10% a year is a fairly common feature of mortgage deals. | The ability to overpay by 10% a year is a fairly common feature of mortgage deals. |
| So, if you are able to shovel extra cash into your mortgage, should you? Mark Harris at mortgage broker SPF Private Clients says: "When interest rates are at record lows, it makes sense to overpay on your mortgage. Sensible borrowers will use the 'savings' they are making each month to overpay, clearing the balance of their mortgage more quickly and saving thousands of pounds in interest in the long run. However, the reality is that with rising living costs, many people will instead have been using the money saved each month for other outgoings." | So, if you are able to shovel extra cash into your mortgage, should you? Mark Harris at mortgage broker SPF Private Clients says: "When interest rates are at record lows, it makes sense to overpay on your mortgage. Sensible borrowers will use the 'savings' they are making each month to overpay, clearing the balance of their mortgage more quickly and saving thousands of pounds in interest in the long run. However, the reality is that with rising living costs, many people will instead have been using the money saved each month for other outgoings." |
| He adds that in the shorter term, with lenders continuing to offer the most competitive mortgage rates to those with sizeable amounts of equity in their homes, "it makes sense to improve your equity position if you can. Overpaying will make you more attractive to lenders and easier for you to remortgage". | He adds that in the shorter term, with lenders continuing to offer the most competitive mortgage rates to those with sizeable amounts of equity in their homes, "it makes sense to improve your equity position if you can. Overpaying will make you more attractive to lenders and easier for you to remortgage". |
| Adrian Anderson, at rival broker Anderson Harris, says that while overpaying is a wise move, borrowers need to ensure they keep some money back for emergencies. "Money overpaid is notoriously difficult to get back again so don't plough all your savings into the mortgage – keep some back to pay for an unexpected outgoing. Also, lenders have different rules on overpaying, with some allowing 10% per annum and others 20%, so make sure you don't overpay by more than you are officially allowed, or you will have to pay a penalty for your prudence, which makes no sense at all." | Adrian Anderson, at rival broker Anderson Harris, says that while overpaying is a wise move, borrowers need to ensure they keep some money back for emergencies. "Money overpaid is notoriously difficult to get back again so don't plough all your savings into the mortgage – keep some back to pay for an unexpected outgoing. Also, lenders have different rules on overpaying, with some allowing 10% per annum and others 20%, so make sure you don't overpay by more than you are officially allowed, or you will have to pay a penalty for your prudence, which makes no sense at all." |
| Top mortgages | Top mortgages |
| Chelsea Building Society | Chelsea Building Society |
| NatWest | |
| Yorkshire BS | Yorkshire BS |
| Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |