abbey flexible mortgage

moneyspinner64

I took this mortgage out about 4 years ago and I consider myself lucky to have it as they don't do the deal i got any more.I am paying...0.75 above the base rate.
i have never used this product to maximum benefit as mortgage was only £12,000.We have borrowed £25 000 more for an extension, so owe £38 000.

I don't really understand how the flexible mortgage works.I have put £4000 into the savings pot and hope to make regular overpayments of about £600 / month.By putting money into the savings pot, are we actually paying off the capital or do we have to transfer the savings to reduce the capital?(I know we are reducing the term if the mortgage , which is what we wanted to do)

PBA

If you've put money in to the savings pot then you're effectively paying off the capital. As you have a 38k mortgage but have 4k in savings pot then you're only being charged interest on 34k. Your monthly payment is still based on you having a 38k loan, so each month the balance in the savings pot will be going up a bit. Hope that makes sense, I always seem to do really badly trying to explain the benefits of this product!