Overpayment has reduced standard monthly payments!

tightfella

frible wrote:

This seems typical of the way mortgage companies treat us, they will always select the option that serves thier own purposes best. Whenever we make an overpayment, we always speak to customer services first to ensure they "spend" OUR money the way we want it spent. Never assume they will do what's best for you.

so I'm not the only one being ignored by my lender?? :mad:

I went into the high street branch last friday, had a nice chat & presented them with a cheque for 3k toward paying off capital of my loan. They didnt even offer the choice of term reduction or monthly payment reduction , so I explicitly told them. Capital only, no change in length of term or monthly amount. Alls good?

Not so. Confirmation letter came today, with my adjusted monthly payment advise. GGGRRRRRR

Xbigman

tightfella wrote:

, so I explicitly told them. Capital only, no change in length of term or monthly amount.

Er, thats impossible. The choice is to reduce payments *or* term. Otherwise, whats the point of paying off 3k if you still pay the same amount for the same lengh of time.

If anyone does this through a branch again I would suggest handing over written instructions with the payment. There is no argument about it and less chance of mistakes that way.
Regards



X

MikeLB

My own Halifax experience is that I make large monthly overpayments. This comes off the capital automatically because the Interest is calculated daily. It all shows up when you recieved the End of Year Summary Sheet from your mortgage company.

The term will never be reduced on your mortgage by overpayments unless you specifically request this in writing and the company approve this reduction in the term. This is because you have taken out a mortgage for a set period of time and the company must always work on the assumptuion that despite overpayments, you may stop these and only pay the minimum for the rest of the term.

This does reduce your basic monthly payment, however I dont see what the new figure on a monthly basis is because with the Halifax, they only issue a new monthly figure when the interest changes. That doesnt mean I am being overcharged. its a paperwork saving exercise more than anything. I guess it varies from lender to lender as to how they do this.

tightfella

Xbigman wrote:

Er, thats impossible. The choice is to reduce payments *or* term. Otherwise, whats the point of paying off 3k if you still pay the same amount for the same lengh of time.

If anyone does this through a branch again I would suggest handing over written instructions with the payment. There is no argument about it and less chance of mistakes that way.
Regards



X

quite correct, my mistake..... :embarasse

a quick phonecall to the contact centre all is sorted.

Thefunkygibbons

I make sure that it is in writing that they take the same amount each monthe regardless of the effect of overpayments

And still, every chance they get they reset it, but I also keep the mortgage detail in cahoot so I can make a manual payment pretty quick anyway

William_Mateless

Every month I overpay and every month my mortgage company (Mortgage Trust) send a letter saying that my due payment has reduced. So I write to them every month increasing the amount I overpay by the corresponding amount they reduced it by. It's a battle that we wage every 21st of every month! My overpayments just keep going up and up, I have a standard letter printed out and just handwrite the new amount in!
I will pay my mortgage off early Mortgage Trust and there is nothing you can do to stop me! Costs me the price of a stamp though!

gallygirl

William_Mateless wrote:

Every month I overpay and every month my mortgage company (Mortgage Trust) send a letter saying that my due payment has reduced. So I write to them every month increasing the amount I overpay by the corresponding amount they reduced it by. It's a battle that we wage every 21st of every month! My overpayments just keep going up and up, I have a standard letter printed out and just handwrite the new amount in!
I will pay my mortgage off early Mortgage Trust and there is nothing you can do to stop me! Costs me the price of a stamp though!

This seems like bureaucracy gone mad. As they are making life difficult for you I suggest you do the same. I would write to their chief exec, sending a copy of all their letters to you (or a sample, but make it clear how many there have been, eg.
16th August overpayment of xxx made.
21st August letter received from xxx bank informing me of my new payment.
22nd August letter to bank informing them of my new payment
16th Sept overpayment of xxx made etc.

I would also put in an estimate of their staff costs, e.g. 15 minutes per letter @ £15 per hour, including all overheads.

In general this type of correspondence seems to work well if you do this by email. It is usually possible to work out chief exec's email address if you find any email addresses with names on relating to that company - try looking at their correspondence or on their website. Different type of company, but OH got reply from chief exec of Wanadoo at 11pm at night (blackberries have a lot to answer for!)

Good luck and don't let the b*****s stop you overpaying!!!!

Longpockets

I have my mortgage set up as interest only, this is paid by Direct Debit.
I have then set up a standing order with which I overpay by any amount I wish each month. This also has the advantage that I am only committed to pay the interest each month, in case anything adverse happens to me e.g. redundancy etc.
I currently have my standing order set to a level quite a bit higher than is needed so that I can shorten the mortgage term.
I try and increase my payments by £10 per month every month and add in any reduction in the interest calculation because of say an interest rate reduction or the end of year recalculation.
Overpaying in this way means I do not have to contact the bank at all I just keep an eye on what they are taking in interest each month and adjust my standing order appropriately.

Hope this helps

Miss_Penny_Pincher_2

Thanks everyone for this thread - we made our first mortgage payment last month with an overpayment too and I just assumed my mortgage company would take it off the term. Thanks to reading this I thought maybe they would just use it to reduce the monthly payments so I phoned them and that was what they had done but when I asked for it to reduce the term instead they said that was fine... fingers crossed!

Thriftylady

I agree that a bank/building society/lender will never do whats best for the customer, only whats best for their business.

But I think some of the posters are being a wee bit hard on the companies in this case - a mortgage offer is a legally binding document which refers to a specific term. Therefore if you make a capital payment against your mortgage they are legally obliged to recalculate the payments to reflect the reduced balance. So it goes without saying that if you owe e.g. £100,000 and pay £2000 off, the monthly repayments over the same term, but on the reduced amount, will be less. The legal aspect is also why a verbal instruction is not enough - they would need to be able to provide proof to an auditor or financial ombudsman that they did not alter the terms on which you borrowed the money.

But having said all that, it shouldn't be a problem if you always send a written instruction stating that your intention is to keep the payments the same and reduce the term. As with everything in life, its no good assuming that the lender knows that this is what you intend to do, there is no guarantee that making a reduction means you also want to reduce the term. When I worked for a mortgage lender (which was quite recently) only about one in five of our customers who made a capital reduction actually wanted their payments to remain the same - most people were more interested in reducing their monthly outgoings than in reducing the overall term of their mortgage or the amount of interest paid.