NRAM Overpayment Options

Posted on 6 March 2015 by Liz

I have an NRAM mortgage £86,543 mortgage and £4206 unsecured. When making over payments is it best to allocate to mortgage or unsecured loan? I am in neg equity and would like to know which option will help me. SVR is 4.78%.

Hi Liz

All the time you are in negative equity you are going to find it nigh on impossible to move home.  For this reason alone I would advise making overpayments to your mortgage and not your unsecured loan. Before you do make any sort of overpayment you should check whether or not you would be liable to an early repayment charge, I don't think you will be if you are on SVR but you don't want to be stung by a penalty if it can be avoided.

Unless you originally took out a flexible mortgage deal, the amount that you can over pay may be limited by the terms of your mortgage to 10% of your mortgage advance each year. This is normally more than enough to cover how much people can afford to over pay, but you should check if there are any restrictions on how much you can pay as well as if there are any penalties.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


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