Mortgage overpayments

[Merlot]

I am looking to take out a (reasonably) small mortgage, and like the look of Natwest.

Having rebudgeted for the new property, after all our costs we will have a decent amount 'surplus' each month, of which I would like to put some of this towards overpaying the mortgage.

This is my first mortgage. What does the stuff below mean?

Natwest said:

Early repayment charge

5% until 30/06/2010
4% until 30/06/2011
3% until 30/06/2012
2% until 30/06/2013
1% until 30/06/2014


Overpayments permitted 10% of outstanding mortgage balance each year without extra charge

Does this mean I can repay 10% of the outstanding mortgage balance each year with no charge, or does 'early repayment' in this context simply mean swapping mortgage providers? (Ie exit penalty?).

The mortgage is 5.49% Fixed for 5 years.

I have an appointment with the adviser later, but I like to be clued up before I go in!

[Simpo Two]

I think 'early repayment' means paying off the whole lot - for example if you change providers or win the lottery. It's a way they make more money out of you.

[Merlot]

Simpo Two said:

I think 'early repayment' means paying off the whole lot - for example if you change providers or win the lottery. It's a way they make more money out of you.

I thought this would be the case, with up to 10% overpayments not incurring a penalty.

If this is correct, sounds fine.

[scotal]

Merlot said:

Simpo Two said:

I think 'early repayment' means paying off the whole lot - for example if you change providers or win the lottery. It's a way they make more money out of you.

I thought this would be the case, with up to 10% overpayments not incurring a penalty.

If this is correct, sounds fine.

If you pay off 10% of the mortgage each year, over and above your standard payments you'll be fine.
If you pay off more than 10% the excess will attract a fee at the rate (5/4/3/2/1) listed above.

However the fee will be on the overpayment, so if you pay off 12% of the mortgage balance, you will pay the ercs at 5% of 2% not 5% of the whole mortgage.

YHM BTW. (no you dont, you dont allow them. Drop me a line if you want advice.

Edited by scotal on Friday 29th May 10:19

[Merlot]

scotal said:

Merlot said:

Simpo Two said:

I think 'early repayment' means paying off the whole lot - for example if you change providers or win the lottery. It's a way they make more money out of you.

I thought this would be the case, with up to 10% overpayments not incurring a penalty.

If this is correct, sounds fine.

If you pay off 10% of the mortgage each year, over and above your standard payments you'll be fine.
If you pay off more than 10% the excess will attract a fee at the rate (5/4/3/2/1) listed above.

However the fee will be on the overpayment, so if you pay off 12% of the mortgage balance, you will pay the ercs at 5% of 2% not 5% of the whole mortgage.

YHM BTW. (no you dont, you dont allow them. Drop me a line if you want advice.

Edited by scotal on Friday 29th May 10:19

Thanks Scotal. I have sent you an Email with my email address!