Help please am a dunce!

ocemeer

Got a small pay rise thought great can overpay into my mortgage every month, not much but it makes a difference, then i read this and got very very confused....
'If you do not takes steps as described in 14.4 (writing a cheque etc) we will be unable to treat the extra payment as money received or the credit of your mortgage account. Instead, we will keep the extra payment (but without paying you any interest on it) and put it towards your subsequent monthly payments'

what does it mean please, (i hope it means that although it does not come off the capital it does reduce the amount of time to repay the mortgage)

tyllwyd

What does it say in paragraph 14.4?

ocemeer

14.4
overpayments by cheque saying capital payment (so it comes off amount borrowed)

tyllwyd

So are they saying that if you want to pay back the capital, you have to write them a cheque saying 'capital payment'. If you don't do that, they will just treat the money as an early payment of your normal monthly payment (so that if you normally paid £500, but one month you gave them £700 instead, they would just keep the extra £200 without paying interest, until the next monthly payment was due, when they would only expect to receive £300 from you). But that is only my best guess, I have no idea whether I'm right or not!!

If that is the case, it looks as if making regular overpayments might be a bit of a hassle - I'd be tempted to set up a standing order into a savings account, and then make two or three capital repayments by cheque per year rather than trying to do it every month.

MSE_Martin

I think tyllwyd is right. When you make capital overpayments on a non-flexi mortgage you need to assure yourself that it is a capital overpayment. One of the problems here may be the amount. There is often a minimum amount you can overpay e.g. £250 a month.

The solution's quite easy though just call up your mortgage company and ask it how you make capital overpayments and is there a minimum - it'll be used to the question should you should get a simple answer to guide you through.

If there is a minimum again tyllwyds suggestion seems the sensible one. Knock the cash into a top savings account then make a lump sum payment three or four times a year

martin

ocemeer

I am following the advice and saving up for capital payments, as long as I remain organised (and organise dh to a mm) and remember to make the payments should not lose out. Am going to ring and check with company (again) just a shame as the conveniance of an overpayment monthly by dd would have fitted in more with my job.


good news rang the mortgage company, who said balderdash and that overpayments would bring down the term of my mortgage, hurrah so set up and smiling