Overpayments
This page includes information on overpayments, including overpayment reserve and borrow back.
10% annual overpayment allowance
Your client can save money by making overpayments of up to 10% a year.
And they can benefit even more as their overpayment allowance is based on the original loan amount and not the reducing balance.
NB: If your client overpays by more than 10% a year Early Repayment Charges (ERC) will apply during the deal period.
Example for new purchase or remortgage
| Product Reservation Date | 29/05/2019 |
|---|---|
| Loan Amount | £100,000 |
| Overpayment Allowance | 10% of £100,000 = £10,000 |
| Mortgage Completion Date | 02/07/2019 |
| Allowance of £10,000 reset at next anniversary date until the end of the benefit period | 01/08/2020 |
In the example above, the original loan amount advanced on 2 July 2019 is £100,000, making the year one overpayment allowance £10,000.
Whatever the balance at the end of year one, the overpayment allowance for year two remains calculated as a percentage of the original balance (£100,000 x 10% = £10,000).
Important information
For products reserved on or after 29 May 2013:
- If your client overpays by more than their overpayment allowance each year, an Early Repayment Charge will be payable on the amount paid in excess of the overpayment allowance
- When a new switch occurs, the overpayment allowance is reset. The new yearly cycle will start from the new switch date.
- The annual overpayment allowance is only applicable whilst in the deal period of our fixed and tracker rate mortgages
- Tracker rate mortgages reserved after 2 May 2014 have no ERCs so your clients can make unlimited overpayments without incurring a charge
- The original loan amount advanced can be found in the original Mortgage Illustration/Offer
- Percentage allowance is a calculation of the original loan amount minus any administrative fees.
For products reserved on or before 28 May 2013:
- These will remain on the £500 per month overpayment allowance
- Any Early Repayment Charges incurred will apply to the entire overpayment amount
Our BMR/SMR, which is currently only available to existing customers reaching the end of their deal period, allows unlimited payments so your client can overpay by as much as they like, when they like.
An overpayment can impact the LTV when completing an additional borrowing (further advance) application. If you would like to remove the overpayment reserve, please follow the overpayment reserve removal process. Terms and conditions apply.
Overpayment reserve
If your client(s) make mortgage payments exceeding the contracted monthly amounts, these overpayments will form an 'Overpayment Reserve'. When keying a rate switch, the current mortgage balance will appear on the screen. Your client can then choose to (with prior permission from Nationwide) utilise this Overpayment Reserve to lower future monthly mortgage payments should they wish.
If your client has an overpayment reserve, please note this may be included in their overall mortgage balance when calculating their Loan to value (LTV). (This won't be included in rate switch applications).
For additional borrowing (further advance) applications the overpayment reserve will be included when calculating their LTV. If you would like to remove the overpayment reserve, please follow the overpayment reserve removal process.
Borrow back
If your client(s) took out their mortgage product deal with Nationwide on or before 29 April 2009, they will move/have moved to our Base Mortgage Rate (BMR) at the end of their deal. Your client will also have access to borrow back and payment holiday facilities. The BMR is guaranteed to be no more than 2% above the Bank of England base rate. If your client chooses to switch to a new mortgage product, they'll no longer have access to the BMR or its facilities and will revert to our Standard Mortgage Rate (SMR) which has no upper limit or cap.
If your client(s) took out their mortgage product deal with Nationwide on or before 3 March 2010, they will move/have moved to our Standard Mortgage Rate (SMR) at the end of their deal. Your client will also have access to borrow back and payment holiday facilities. Please be aware that if your client chooses to switch to a new mortgage product, they will no longer have access to these facilities.
If your client(s) took their mortgage out with Nationwide on or after 4 March 2010, they will move/have moved to our Standard Mortgage Rate (SMR) at the end of their deal. Your client will not have access to borrow back and payment holiday facilities.
Cheshire mortgage
If your client(s) took out their mortgage product deal with Cheshire on or before 14 June 2009, they will move/have moved to our Base Mortgage Rate (BMR) at the end of their deal. If your client(s) took out their mortgage product deal with Cheshire on or after 15 June 2009, they will move/have moved to our Standard Mortgage Rate (SMR) at the end of their deal. On both rates your client will have the ability to borrow back any overpayments they have made. Please be aware that if your client chooses to switch to a new mortgage product, they will no longer have access to these facilities.
Derbyshire mortgage
If your client(s) took out their mortgage product deal with Derbyshire on or before 30 May 2009, they will move/have moved to our Base Mortgage Rate (BMR) at the end of their deal. If your client(s) took out their mortgage product deal with Derbyshire on or after 31 May 2009, they will move to our Standard Mortgage Rate (SMR) when their deal ends. Your client will not have access to borrow back and payment holiday facilities.
Dunfermline mortgage
If your client(s) took out their mortgage product deal with Dunfermline, they will move/have moved to our Standard Mortgage Rate (SMR) when their deal ends. Your client will not have access to borrow back and payment holiday facilities.
Portman mortgage
If your client's current mortgage was taken out with Portman, they will move to our Base Mortgage Rate (BMR) when their deal ends. Your client will also have access to borrow back and payment holiday facilities. Please be aware that if your client chooses to switch to a new mortgage product, they will no longer have access to these facilities.
Payment holidays
Your client may be able to take a payment holiday if they took their mortgage out prior to 4 March 2010.
Your clients can apply to take a payment holiday of between 1 to 12 months and they must have a mortgage that is less than 80% of the value of their home at the end of the payment holiday.
More information for your client, including how to apply, is available on our customer website.
Payment difficulties
If your client is experiencing difficulties in meeting their mortgage repayments then a payment holiday may not be appropriate.
Please ask them to contact us to discuss the options available to them:
Call us on 0800 464 30 40.
Terms and conditions apply.