Overpayment has reduced standard monthly payments!

Joe_Bloggs

@Thriftylady and all.
Perhaps those on the mortgage-free wannabe board are a perverse lot in wanting to get rid of my mortgage rather than extend it. As I see things I am doing nothing wrong in making regular or irregular overpayments to my mortgage providing my actions are within the terms and conditions.
J_B.

A seperate matter
Nationwide Mortgage Conditions 2001. The latest I could get.
Section 4.3 is a muddle as annual interest is prominent but not used any more. Where are early repayment costs mentioned in this document but yet they appear on the website ?

Mumstheword

Mine is with Standard Life. I pay a set amount each month, regardless.

When the interest rate changes, or on my bi annual statement, they always show the figure I should owe each month. Despite that, they still take the amount I have asked them to. It was really easy to set this system up, I just rang them and said please take £x each month. And they do!

On statements, they show what my payments should have been, and how much I have overpaid each month too - which is a great incentive to continue!!

Thriftylady

Joe_Bloggs wrote:

@Thriftylady and all.
Perhaps those on the mortgage-free wannabe board are a perverse lot in wanting to get rid of my mortgage rather than extend it. As I see things I am doing nothing wrong in making regular or irregular overpayments to my mortgage providing my actions are within the terms and conditions.
J_B.

Where did that come from? I can't see how my post could have been interpreted to suggest that I thought people people were doing something wrong or perverse in wanting to pay off their mortgage more quickly !!

What I said was that the lenders aren't mindreaders. And even if they were, they can't alter the terms and conditions of your mortgage by changing the term because the mortgage offer is a legally binding document. Therefore in the absence of any specific instructions they will automatically reduce your repayments.

Joe_Bloggs

@Thriftylady
I am sorry if I caused any offence. I may have been terse. My lender is a mutual building society. I gave instructions to my lender that repayments were to remain the same despite overpayments.
I was one the first to point out on this mortgage-free wannabe forum that terms and conditions may affect ones ability to overpay the mortgage. If overpayments are allowed then there must be documentation as to how they are to be treated somewhere. It is not in my copy of the terms and conditions. I am using custom and practice at present.

If remortgaging is allowed then the let's call this flexible total repayment with optional lender replacement. The term, the interest rate, the property, mortgage terms and conditions etc are all variable and whatever was written in legal documents becomes history.
J_B.

regularsaver1

Sometimes the systems the lenders have do not allow them to do what a customer wants

Bernard_Coleslaw

regularsaver1 wrote:

Sometimes the systems the lenders have do not allow them to do what a customer wants

...and customers should put up with this why exactly?

Thriftylady

Joe_Bloggs wrote:

@Thriftylady
I am sorry if I caused any offence.
J_B.

thank you ! no offence taken. I completely agree with you that if you have given specific instructions they should be followed.

When the lender I used to work for first introduced their flexible mortgage (many years after everyone else on the market, I might add, and then had the nerve to try to tell customers it was innovative!) they took legal advice about this issue i.e. would it legally be acceptable to just assume that when someone makes a capital repayment that they want the term to shorten but the answer, at that time anyway (about 5 years ago), was that it would not be, due to the fact that the term of the mortgage is stated very specifically in the paperwork. And in reality the majority of our customers actually wanted their monthly repayments to reduce anyway.

I don't think its in anyway strange to want to pay off your mortgage early, I certainly would like to do so if at all possible, but on the other hand I think that for the vast majority of people, paying their mortgage is just something that they accept they will have to do for a long time, and so there is a tendency to take the short term gain of reduced repayments, over the long term gain of a shorter term. But even if the payments are reduced, they are still saving on interest in the long term, since less money owing equals less interest charged, so paying sums off a mortgage is happily one way in which its win win for the borrower....

Thriftylady

regularsaver1 wrote:

Sometimes the systems the lenders have do not allow them to do what a customer wants

this is a very tricky one ! by the time a customer is aware of the shortcomings in a lenders systems, they are already a customer, and possibly in the position where they will lose money by taking their business elsewhere.

Borrowers can complain all they want about inadequate systems, but in reality the lenders will not update their systems as it costs too much - even taking your business away isn't that much of a threat as it is dwarfed by the cost of updating the computer system......In theory the answer is to ask when applying for the mortgage if X,Y and Z can be done, but to be honest, the people who sell the mortgages will have no idea of the systems limitations, as they probably don't use it themselves........

regularsaver1

Bernard - did i say customers have to put up with it?

i was purely saying that lenders should get better systems for everyone

I'll give you an example - a customer wanted the overpayment to reduce her payments by 9 months. This can be done but not so straightforward - can only key in round years - and so you have to key a different start date for that round year to get what the customer wants

jonnydoe

So basically when you overpay and it is set up to reduce you're monthly payment (ie comes off the capital) pay the same monthly amount as before and reduce the term..