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  • FIRST POST
    • VicksterG
    • By VicksterG 12th Jul 17, 12:24 AM
    • 1Posts
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    VicksterG
    Can I get a refund for overpayments made to my mortgage?
    • #1
    • 12th Jul 17, 12:24 AM
    Can I get a refund for overpayments made to my mortgage? 12th Jul 17 at 12:24 AM
    I have made a total of £1700 in overpayments in the past 4 months to reduce my mortgage term and reduce interest. I set up a standing order to make regular monthly payments to do this.
    When speaking to my mortgage company for the third time, I was only then told that I couldn't do this. They informed me the mortgage term would remain the same and the monthly payments would be reduced. This seems somewhat pointless and I would be better off putting my money away into a savings account. It's only been reduced by about £6 - £7 a month!
    I asked for a refund and they told me this would have to be approved by a manager. They told me I would find out within the next 48 hours whether the refund would be approved or refused.
    Not once did they inform me in the two previous conversations that I couldn't reduce my mortgage term by making overpayments despite me making it clear what I wished to do.
    Do they have the right to refuse a refund? Please help!
Page 1
    • Tom99
    • By Tom99 12th Jul 17, 5:42 AM
    • 51 Posts
    • 19 Thanks
    Tom99
    • #2
    • 12th Jul 17, 5:42 AM
    • #2
    • 12th Jul 17, 5:42 AM
    When overpaying you can normally request that the monthly payments are not reduced.

    This is effectively the same thing as reducing the term but the reduced term is not explicitly documented.
    • Edi81
    • By Edi81 12th Jul 17, 6:17 AM
    • 260 Posts
    • 142 Thanks
    Edi81
    • #3
    • 12th Jul 17, 6:17 AM
    • #3
    • 12th Jul 17, 6:17 AM
    Sounds like a case of cutting off your nose to spite your face.

    If the lender agrees to reduce the term this becomes contractual and you need to go through affordability checks.

    continue to overpay, the impact of compounding will start to have an efffect on reducing the term. Put the numbers through a mortgage overpayment calculator to see the impact.
    • getmore4less
    • By getmore4less 12th Jul 17, 7:36 AM
    • 29,497 Posts
    • 17,633 Thanks
    getmore4less
    • #4
    • 12th Jul 17, 7:36 AM
    • #4
    • 12th Jul 17, 7:36 AM
    forget the terms just work on the payment that is what really determines how long the mortgage lasts

    they reduce your contractual payment you up your standing order same effect/cost/benefit.
    • AnotherJoe
    • By AnotherJoe 12th Jul 17, 8:12 AM
    • 7,065 Posts
    • 7,538 Thanks
    AnotherJoe
    • #5
    • 12th Jul 17, 8:12 AM
    • #5
    • 12th Jul 17, 8:12 AM
    I have made a total of £1700 in overpayments in the past 4 months to reduce my mortgage term and reduce interest. I set up a standing order to make regular monthly payments to do this.
    When speaking to my mortgage company for the third time, I was only then told that I couldn't do this. They informed me the mortgage term would remain the same and the monthly payments would be reduced. This seems somewhat pointless and I would be better off putting my money away into a savings account. It's only been reduced by about £6 - £7 a month!
    I asked for a refund and they told me this would have to be approved by a manager. They told me I would find out within the next 48 hours whether the refund would be approved or refused.
    Not once did they inform me in the two previous conversations that I couldn't reduce my mortgage term by making overpayments despite me making it clear what I wished to do.
    Do they have the right to refuse a refund? Please help!
    Originally posted by VicksterG
    That is only the contractual term, not the actual term,which will be reduced.

    Look at it this way, suppose your mortgage was £100k and you were normally paying £1k a month and you made an overpayment of £97k. Your practical mortgage term would reduce as long as you continued with your normal payments of £1k a month, to 3 months, whatever contractually was stated.

    So, carry on overpaying if that's what you want (but don't do it to the detriment of pension,its a common mistake to overpay even though financially pension is substantially better especially for higher rate taxpayers)

    p.s to keep the overpayments up and reduce the term, you will need to compensate for that £6 or £7 a month by adding it to your overpayment. Instead of paying say £400 overpayment in a month, it would need to be £407 say.

    And depending upon your interest rate, it might of course be worth saving into a high rate account instead of overpaying anyway, but thats a function of interest rates not the fact they wont reduce the contractual length.
    Last edited by AnotherJoe; 12-07-2017 at 12:15 PM.
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