Skipton mortgage - overpayments

CHIHUAHUA

Hi
I'm with the Skipton BS and have been overpaying my mortgage on a monthly basis by £350 for a couple of years. I have a 4 year fixed rate deal which is not so fab now but am halfway thru. I can overpay by 10% of the original loan each year which is £8200 without those early repayment charges. I rang CS and asked if i could make further lump sum payments this mortgage year to take opportunity of as much of the 10% overpayment that i could afford - they said yes and took another 1K over the phone - which leaves me with another possible 3K to overpay before end May this year.
They then wrote to me thanking me for the 1K and said they had recalculated my payments due to the LSP and dropped my min monthly payment by £260 ! - am not pleased as this messes up my plan to pay it off as quickly and they have never changed my payments all the time i have been overpaying on a monthly basis.
The 1K overpayment has meant that i will now pay over 3K less over a year.
Yes i could ask to reduce the term but they will charge me £50 and only have 2 years to go in real terms (less i hope and had hoped only a year) and they may not agree anyway.
Have written to seek clarification and am fuming :mad:
Will be upping my monthly overpayments to the full 10% /12 from 1st June
Anyone had this prob or got any advice?
Thanks CHI

dimbo61

Just write and ask for your payments to remain static and any overpayment is just that an overpayment to reduce the capital and not the monthly payment.

CHIHUAHUA

Thanks for your advice - when i received the letter explaining that the monthly payment had been recalculated it didn't seem that i had a choice - however i have written to them so maybe they'll agree to revert it back to the original amount.

dimbo61

You can also contact the mortgage centre by telephone and ask for it to be
made static this can then be adjusted if your circumstances change.

CHIHUAHUA

Thanks again - no letter of reply so rang them and sorted it on the phone - so much easier when not asking for advice from CS just told the chap what i wanted to do and he changed it back!
missed next months payment though due to the small time frame so will need to ring again about that and pay seperately - should have paid it at the same time really and annoyingly it will reduce my 10% OP opportunity by £260 - still so glad that the rest is sorted!
Thanks - mortgage free here i come well in a year or so i hope!
CHI

CHIHUAHUA

Me again

have now had a letter of reply from admin dept clearly informing me that they will not keep my payments static following a LSP but they will not recalculate following reg monthly OPs ??!!
Can't ring them till Monday now
So i'm still in the same boat of £260 p/m reduction for the rest of the term following my OP of 1K - so unfair
Any advice?
thanks CHI

sorry should have said i have aprox 3 years left of my term - owe aprox 20K and was paying £796 p/m as a min payment which is now reduced to £531 with a reg £350 OP - planning to increase the OP from June to the max £680 p/m (10% of original loan) was hoping to clear the whole thing in a year or so.

MarkyMarkD

If you make a capital payment on a mortgage, the lender must either:

- reduce the monthly payments; or
- reduce the term.

It is mathematically impossible for them to "just leave the payments the same".

Some lenders will offer you the choice, each time you make a capital payment, without charge. This may apply even if they would normally make a charge for reducing the term.

If Skipton choose to levy the charge every time you reduce the term, then that's their prerogative. At the end of the day, you agreed to have a mortgage over a particular term and that's the term you are stuck with.

Many lenders do not recalculate anything at all, though, if you simply overpay (by less than whatever their capital payment threshold is - typically £500). That's because they treat such overpayments as prepayments of amounts due in later months, and consequently they don't reduce the monthly payments or their nominal term.

The result is still that you'll pay your mortgage off early, though.

CHIHUAHUA

Thanks for the advice

Actually spoke to the Mortgage admin person today who dealt with my LSP and it was confirmed that with the Skipton any LSP regardless of the 10% OP deal will effect an automatic recalculation and result a reduction in min monthly payments
I've now decided to reduce the term at a cost of £50 but can still overpay so i'm back to paying just over my original position and will pay the mortgage off in 16 months but can't do it any quicker than that without incurring early repayment fees which wouldn't make it worth doing any faster.
Still 16 more payments feels ok and i can manage the monthly payments so am pleased - have also asked to pay the £50 rather than to add to the loan as it all helps.
Wish i could have stuck to my plan to pay off in a year but hey ho - just wished they'd told me that my payments would reduce with the LSP.
Thaks for your help and MF here i come!

MarkyMarkD

I don't understand what you've said. Can you not reduce the term any more? If not, why not? Is it because 16 months is the end of the ERC period?

CHIHUAHUA

MarkyMarkD wrote: »

I don't understand what you've said. Can you not reduce the term any more? If not, why not? Is it because 16 months is the end of the ERC period?

Hi MarkyMark
I've got a fixed rate deal which runs for 4 years - and it runs for another 2 yrs and 2 months but i had a five year term with a total of 3 years 2 months remaining. Skipton wouldn't agree to reduce the term below the 26 months of the fixed rate or i would have had to pay to get out of it - however with the maximum overpayments it will reduce further to 16 months.
If i stayed put with my current term and max overpayments it would take 18 months to pay off so although i've only managed to reduce the term really by 2 months i'd rather get shot of the loan as quickly as poss so have agreed to the £50 charge to change it.
Sorry for not explaining myself correctly!
CHI

MarkyMarkD

Thanks for clearing that up.

So why did you fix your product almost to the end of its term, and beyond the term that you actually want to repay it over??