Capital repayment on endowment mortgage

PamJ_2

I have read through a few threads about capital repayments and overpayments but still need help.

My Halifax mortgage (IO with endowment policy) ends in April 2013, and I regularly overpay by standing order to reduce the outstanding amount.

I made a capital repayment yesterday and because I said I did want to continue overpaying , it went to reduce the term.

One sleepless night later as I panicked about a possible new mortgage end date and no way of repaying it as the endowment isn't due till April 2013 - I went back into the Halifax and was told this doesn't mean my mortgage ends earlier and that this was probably the right option ( reducing payments v term). So is this a case of 'reducing the term' not meaning 'reducing the term'?

Can any one shed any light? Should I get it changed to reducing the repayment? Thanks

getmore4less

You should be ok these are the terms used to decide how to calculate future payments.

Reducing payment does just that, reducing term keeps the payment the same but the original contract term still appllied for actualy finishing the loan. It means that on the future should you return to regular schedule your payments will be lower due to the overpayments.

PamJ_2

Thanks for that,

I think I've got confused thinking reduce the terms meant an earlier end date for the mortgage. Looks like that's not necessarily the case!

Trying_to_be_good

I'd make sure I get in writing that they're NOT changing the end-date for the mortgage. I don't understand why they'd use the expression 'reducing the term' on an IO mortgage, normally the only option is to reduce the minimum monthly payment (but you are choosing to keep the actual monthly payment at the same rate you currently pay).

getmore4less

PamJ wrote: »

Thanks for that,

I think I've got confused thinking reduce the terms meant an earlier end date for the mortgage. Looks like that's not necessarily the case!

It can mean that and normaly would result in the mortgage getting potentialy paid of early, but in most cases you can still continue the full contracted term by for example keeping £1 on the mortgage.

A few contacts do have early termination on full payment in them.

Why not get out your T&C's and have a good read just in case there are some things you don't know about.