Overpayments Penalty to Woolwich Barclays Mortgage

propercopper

I'd be grateful for some advice from other Woolwich Barclays repayment mortgage holders.

I overpayed my Woolwich mortgage by the maximum 10% allowed in a year without financial penalty. I did it with a lump sum not long after completion due to having a bit more cash than I thought I'd have.

However, in the meantime interest rates have been cut by another 0.5%. Woolwich don't reduce the monthly payments after an overpayment or interest rate change, only at the annual review in September. So, I will be overpaying (quite happily) a lot more this year.

But I am concerned about the 10% cap - has anyone been in a similar situation, and did Woolwich try and enforce the penalty fee for going over the 10% overpayment cap?

I rang Woolwich with the question and got a 'Yes' in one phonecall and a 'No' in the next one!

Any advice gratefully received.

HelpWhereIcan

As you have made the 10% overpayment already, Woolwich will have the right to charge you an early repayment charge on any further overpayments.

I would assume that the person who said 'Yes' (you will be charged) is correct until you know otherwise just to be sure.

However, I am very surprised that the Woolwich themselves did not suggest the most simple solution.

As you said, they only review your payment once a year, but you can ring them up and ask them to adjust your payment immediately. That will bring your payment down now (you pay the saving into a savings account in order to build up an extra lump sum) and you run no risk of being classed as having made more than the 10% allowable overpayment.

foreversummer

I cannot see how they can count any part of your contractual payments as overpayments.

If you take out a mortgage for 25 years, the monthly payment amount adjusted annually, and you just make the contractual payments, you will have repaid your mortgage at the end of the 25 year period. No overpayments will have been made. Because of the very nature of annual repayment reviews, some years you will overpay and some years you will underpay.

Foreversummer