NatWest Buy-to-Let Stress Rates Slashed
NatWest mortgages have announced that they will be increasing their overpayment allowance on their mortgage products, meaning that borrowers will have more of an opportunity to pay back their loan quicker and sooner without incurring any extra fees. Here is a breakdown of what the changes are, specifically what they mean, and what Oportfolio mortgage advisors think.
Mortgage Overpayment Allowance
When getting a mortgage, a lot of people probably think that you secure a monthly payment payment rate and you pay back your mortgage per month at this rate and that’s it….well, that is not entirely true. Yes, you would normally pay your mortgage per month at an agreed rate of payment, however most lenders will allow a borrower to overpay on their mortgage if they so wish.
Most lenders will allow up to 10% overpayments per year on a personal mortgage, meaning that you can pay off 10% more of your mortgage than your agreed monthly payment. Mortgage lenders make a profit off the interest that they charge on the mortgage loan, this is why they provide mortgages in the first place. The reason that lenders often cap their overpayment allowance at 10% is because they don’t want you clearing your loan too soon without paying them enough in interest. When lenders offer a mortgage they will normally stipulate that if you pay back your loan too soon or pay too much per annum on your loan, that you will be liable to extra charges (Early repayment charge). This can become very costly with some lenders charging over 5% of the mortgage balance in fees.
NatWest Mortgage Overpayments
NatWest was previously one of the lenders that offered a standard 10% overpayment allowance, however they have recently announced that they will be increasing this allowance to 20% per year. In a message to mortgage brokers, NatWest said:
‘We’re pleased to announce that both new and existing NatWest mortgage customers are now able to make an overpayment of up to 20%, up from 10%, without incurring an Early Repayment Charge (ERC). Overpayment allowances will renew annually on the anniversary of product draw down. This increase will apply to customers on fixed or tracker rate products.’
What Mortgage Brokers Think
Senior mortgage and insurance advisor at Oportfolio Jade Pinkerton is very positive about the new overpayment changes coming from NatWest. She said:
‘I think this is very good news for NatWest mortgage borrowers. We have lots of clients whose main concern when getting a new mortgage was that they wanted more flexibility on ERCs. In reality, most people don’t end up keeping the same mortgage or even the same property for the entire mortgage term. People move and refinance properties, so having flexibility to overpay a mortgage without the risk of incurring a large early repayment charge is preferable. Of course there are also tracker rates with no ERCs at all available, but this is a good move from NatWest. Will other lenders follow suit?’
If you or anyone you know is wanting to know more about mortgage repayment flexibility, please feel free to give our team a call today. We are here to help.
