Payments

How we'll calculate interest on your client's first payment

Once your client completes their application, we'll send them a First Payment Notice in writing within 7 working days. This confirms their first mortgage payment and when the payment will be taken from their account.

The first payment is often higher than their normal monthly payment. This is because it includes:

• interest from the date the funds are released to the end of that month, and
• the normal monthly payment for the following month.

For example, if your client moves in on the 12 May, their first mortgage payment in June will include interest from 12 - 31 May, plus the standard June payment.

Overpayments

Overpayments can reduce your client's balance and help build an overpayment reserve.

Your client can make overpayments of up to 10% a year without incurring Early Repayment Charges (ERCs). If they exceed this 10% allowance during the deal period, ERCs will apply.

We base your client's overpayment allowance on the original loan amount, not the reducing balance - helping them make the most of their allowance.

Overpayments can take up to 24 hours to show on the mortgage account once they are paid.

Criteria

Our Base Mortgage Rate (BMR) and Standard Mortgage Rate (SMR) allows unlimited payments for existing clients who reach the end of their deal period. This means they can overpay as much as they like, whenever they choose.

Products reserved on or after 29 May 2013

• If your client overpays by more than their annual overpayment allowance, an ERC will be payable on the amount over the overpayment allowance
• When your client switches to a new deal, a new annual overpayment allowance begins from the switch date
• The annual overpayment allowance only applies during the deal period of our fixed and tracker rate mortgages.
• Tracker rate mortgages have no ERCs, so your clients can make unlimited overpayments without charges - even when switching a tracker product to a fixed rate product.
• You can find the original loan amount advance in the original mortgage illustration or offer
• The overpayment allowance is calculated as a percentage of the original loan amount, excluding any admin fees

Products reserved before 29 May 2013:

• Your client has a £500 per month overpayment allowance
• If they exceed this, any ERCs apply to the full overpayment amount.

Your client can find more information, including payment details, on the customer website.

Overpayment reserve

If your client makes mortgage payments above their contracted monthly amount, these overpayments will build an 'overpayment reserve'.

If your client has an overpayment reserve, it may be included in the mortgage balance when we calculate the loan to value (LTV). This does not apply to rate switch applications.

Rate switch applications

When keying a rate switch, the current mortgage balance will be shown. With prior permission from Nationwide, your client can choose to use their overpayment reserve to lower future monthly mortgage payments.

We will only use the outstanding balance to calculate the LTV.

For example, if your client has:

• £20,000 in an overpayment reserve
• A current mortgage balance of £150,000
• A property value of £200,000, so the LTV would be 75%.

Additional borrowing (further advance) applications

We will include the overpayment reserve when calculating LTV, which may impact the application.

If needed, you can remove the overpayment reserve by completing the overpayment reserve removal form (PDF, 70.3KB).

To discuss the impact of giving up the overpayment reserve, call 0345 609 2531.

If the overpayment reserve does not impact the available products, your client may choose to keep it in place for flexibility with future payments.

Borrow back

If your client took out their mortgage with Nationwide on or after 4 March 2010, they will move (or have moved) to our SMR at the end of their deal.

Your client will not have access to borrow back or payment holiday facilities.

If your client took out their mortgage with Nationwide between 30 April 2009 and 4 March 2010, they may have access to the borrow back facility, allowing them to withdraw overpayments as a lump sum.

Before completing an overpayment reserve removal form (PDF, 70.3KB), make sure your client understands that removing the reserve means they will no longer be able to use it for future underpayments or borrow back.

If your client took out their mortgage with Nationwide before 30 April 2009, they will move (or have moved) to our Base Mortgage Rate (BMR) at the end of their deal.

Your client will 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 switches to a new mortgage product, they will lose access to the BMR and its associated facilities, and will move to our SMR, which has no upper limit or cap.

Visit the existing Nationwide borrowers page to see the switching and additional borrowing options for your client.

Your client may be able to take a payment holiday if their mortgage was taken out before 4 March 2010.

They can apply for a payment holiday of between 1 and 12 months. To be eligible, their mortgage must be less than 80% of the property value at the end of the payment holiday.

More information, including how your client can apply, is available on our customer website.

Repayment methods

Capital and interest

• Capital and interest (repayment) mortgages are available for all borrower types

Interest only / part and part

For new purchase or remortgage applications

• Read more about interest only and part and part repayment options on the interest only page

Existing interest only customers moving home

• Read more on the existing Nationwide borrowers page

If your client is having difficulty meeting their mortgage repayments, a payment holiday may not be appropriate.

Ask your client to contact us to discuss the options available to them by visiting the customer website or calling 0800 464 3040. Terms and conditions apply.

For guidance on how you can support your client, see our supporting your clients page.

Acceptable proof of payment history

Applicants must not have exceeded 3 months of arrears in the last 3 years.

Evidence of mortgage payment history

Provide one of the following:

• The last annual mortgage statement (covering 12 months of payments)
• Where the mortgage statement covers less than 6 months and is over 6 months old, we require the last 3 months bank statements
• If you don't have the above, we'll require an existing lender's reference.

Tenancy payment history

You do not need to verify payment history for applicants who are currently renting or who have been renting over the last twelve months.

For mortgages originally taken out with Cheshire, Derbyshire, Dunfermline or Portman, use the information below to understand which rate your client will move to at the end of their deal and whether they'll have access to features such as borrow back or payment holidays.