Bristol & West Overpayment Problem

Andrew_Stubley

I currently have a mortgage with Bristol & West. The Fixed term ended and due to the interest rate the monthly repayments were reduced. I decided that actually I wanted to make over payments into the mortgage to pay it off more quickly. When I phoned them up to do this they told me that any additional money I paid into the mortgage wouldn't actually pay off the mortgage. It would be held in a seperate account until next April. I would therefore gain no benifit from making an overpayment each month. I was actually reccomended not to pay the money in to the mortgage by the Bristol & West advisor. This seems ludicrous to me and a way for Bristol & west to make me pay additional interest. I thought legally I once my fixed term completed that Iwould be able to make overpayments. Has this happened to anyone else? Is there something I can do? I am only a couple of years in to the mortgage and if a change then the interest rate on any new mortgage will be prohibitive? If there is nothing I can do, what should I do with the additional money between now and April when I can actually pay off some of the mortgage?

Any help greatly appreciated.

Andrew

Dranny

From a recent KFI I got thru The Post Office (B&W).

"11. What happens if you want to make overpayments?
Overpayments are permitted on this mortgage. A lump sum overpayment can only be made by cheque and is any amount that
you pay to us in addition to the monthly payment due. When we receive a lump sum overpayment, we recalculate the amount
you owe and the amount of interest you pay with effect from the following day. This means you get the benefit of paying less
interest straight away. Regular overpayments can only be made by standing order and are amounts that you pay to us each
month in addition to the normal monthly payment. When we receive a regular overpayment, we recalculate the amount you owe
and the interest you pay at the end of our financial year (currently 31st March). The amount you owe will not be reduced
immediately. Early repayment charges apply and we charge an administration fee (currently £50) on each occasion –
please refer to section 10 for details. However, you can make lump sum and/or regular overpayments that will not incur
an early repayment charge or an administration fee provided that (1) each lump sum is not less than £500 and (2) the
total amount repaid does not exceed 10% of the loan amount owed at 1 April. If an overpayment is made which causes
the total amount overpaid to exceed 10% then the whole of that overpayment will be subject to any early repayment due
and an administration fee will be payable."

This is what I accept will happen if I go ahead with them.

Jonbvn

I would seem B&W calculate interest yearly. This means regular monthly overpayments will not reduce the interest due each month. Kudos to B&W for good advice!

What you do is save your monthly overpayments in a separate savings account and make a lump sum payment a few days before the yearly interest is calculated.

This should have been in your mortgage T&C's. Most lenders (but not all) calculate interest daily, and overpayments have an immediate impact.

Check out the MSE link on this.
http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings#time