When you stop overpaying ?

kingrollo

I overpaid on my mortgage last year by increasing my monthly payments - then in November I moved into lower paid employment so stopped the overpayments - as this point the building society used what I had overpaid - to reduce my future payments - and not reduce the term (there was no consultation in this)

I realised I haven't been cheated out of any money - but I wanted to reduce the term - and I am really annoyed with what they have done. I have wrote to them several times - and only now have I managed to unravel what they have done ........

I am considering taking this to the ombudsman - the building society have said there is no point (but won't stop me) - what do you think ? - do I have cause for a complaint ?

gymfiend

So from the moment you had overpaid, they used the overpayments to reduce your future payments i.e. the next months, so each month you were overpaying by slightly more?

When I opted to overpay on a monthly basis I specified that it should be taken from the capital and the term reduced as such. I also specify this each time I make a lump sum overpayment, and ask them to confirm the exact amount outstanding after the overpayment.

Did they ever ask you? Maybe this is standard practice if you don't specify?

kingrollo

gymfiend wrote: »

So from the moment you had overpaid, they used the overpayments to reduce your future payments i.e. the next months, so each month you were overpaying by slightly more?

When I opted to overpay on a monthly basis I specified that it should be taken from the capital and the term reduced as such. I also specify this each time I make a lump sum overpayment, and ask them to confirm the exact amount outstanding after the overpayment.

Did they ever ask you? Maybe this is standard practice if you don't specify?

No when I halted the overpayments - the spread the amount I owed over the original term - meaning I have lower repayments - but the term is as it was. This is the default action - I am a pretty annoyed as the reason I overpaid was to reduce the term. I have now set up more overpayments - but they have said that if I stop these the same thing will happen again. The only way around it is to to pay a £50 admin fee and alter the term of the mortgage - but then I must always pay the higher amount ie I can't stop the overpayments....

I think I will take this to the ombudsman ?

Comyface

kingrollo - I honestly don't think you have cause for complaint.

You entered into a mortgage contract with this company for a term of X years. They have stuck to their side of the bargain, calculating your monthly payments based on repaying your debt of Y over the agreed term of X.

Think of it the other way - if you had wanted your monthly payments to reduce as a result of your overpayments and they had amended the term of your mortgage without asking you, wouldn't you be cross? You say yourself that you don't want to amend the term as you must always make the higher amount, so just keep making your overpayments and your mortgage will finish early anyway, as your contractual monthly payment will reduce due to the overpayments.

kingrollo

Comyface wrote: »

kingrollo - I honestly don't think you have cause for complaint.

Think of it the other way - if you had wanted your monthly payments to reduce as a result of your overpayments and they had amended the term of your mortgage without asking you, wouldn't you be cross? You say yourself that you don't want to amend the term as you must always make the higher amount, so just keep making your overpayments and your mortgage will finish early anyway, as your contractual monthly payment will reduce due to the overpayments.

Thanks for your honesty ....but.

I overpaid to reduce the term - they told me they wouldn't reduce my monthly payments as va result of overpayments. But they did exactly that once the overpayments stopped.

My mortgage won't finish earlier - if I make overpayments, but then stop these should I need the money for new car etc.

With a previous mortgage provider you had to write in and say how you wanted the overpayments to apply - here I don't have to say anything, as they say they won't reduce the monthly payments - the assumption they make is that the overpayments will continue for the rest of the mortgage - in my case they probably won't.

Welshlassie

Check your original key facts document and she what it says about how they allocate you overpayments etc. I make sporadic overpayments, sometimes several in a month sometimes none for several months, how do they determine when you have finsihed overpaying??

kingrollo

Welshlassie wrote: »

Check your original key facts document and she what it says about how they allocate you overpayments etc. I make sporadic overpayments, sometimes several in a month sometimes none for several months, how do they determine when you have finsihed overpaying??

They know I have finished overpaying, when I call then to stop the overpayments. But then what they have done is calculate the repayments over the original term - so my repayments are lower - but the term remains the same. - Not what I wanted.

cocktail

you should have specified it when you made the overpayments. from your post it seems that the building society has done nothing wrong. you should read the terms of the mortgage and learn from your mistake

TotallyBroke

kingrollo wrote: »

My mortgage won't finish earlier - if I make overpayments, but then stop these should I need the money for new car etc.

But if your term was reduced and your payments kept the same. You would not have any overpayment money to spend on a new car.
You are not actually losing out here in any way shape or form. If you want to stop overpayments at a particular point then you can and then start again when you do.
You are also pretty lucky that you do not have a restriction on the amount of overpayments. I can only overpay by 10% each year so the lower the amount owing the lower the overpayment.

kingrollo

I know I am not loosing - but it seems:-

1.They originally say overpayments will not be used to reduce subsequent payments - implying that the term will reduce.

2.Then they say say they need written authority to reduce the term

Then when I stop overpayments , they do precisley what they said they wouldn't do in 1, and without any authority from myself.
I overpaid 2.5k last year - i thought this would reduce my term by about 6 months - now I find its reduced my monthly payments by £20 ! - amd mortgage has as long to run as it did before I made my overpayments .....I should have just had a holiday last year !

henm01

kingrollo wrote: »

I know I am not loosing - but it seems:-

1.They originally say overpayments will not be used to reduce subsequent payments - implying that the term will reduce.

2.Then they say say they need written authority to reduce the term

Then when I stop overpayments , they do precisley what they said they wouldn't do in 1, and without any authority from myself.
I overpaid 2.5k last year - i thought this would reduce my term by about 6 months - now I find its reduced my monthly payments by £20 ! - amd mortgage has as long to run as it did before I made my overpayments .....I should have just had a holiday last year !

I had a similar experience with Abbey, plus there were other admin problems. As soon as I could switch to another lender (without penalty) I did!