Abbey Flexible Mortgage

sammyjo312002

As the title suggests, I have a flexible mortgage with Abbey. One element of the facility which continues to confuse me, is what is termed 'overpayment (1) and overpayment (2) in my savings pot.

Each month, I make deposits into the savings pot, which is reflected on line. However, every month 'overpayment (1) and overpayment (2)' also appear (which can be anything between £50 and £7.71). I do not make these payments!.

Upon calling Abbey (about a different isuse), I mentioned these payments, and was told 'oh, thats becasue you overpay each month' . :think:

Why are these payments made by Abbey?

Can anyone shed any light?

jill2002

As you have funds in your savings pot, the overall balance of your mortgage is reduced. Therefore, although they ask you to make the normal payment every month of your outstanding mortgage balance (not including the savings pot) then the difference is classed as an over payment.

E.G. Mortgage balance £100,000 - normal monthly payment £500

Savings pot balance £10,000 (therefore net mortgage balance is £90,000 which would require a payment of - say - £480)

As the funds are in the savings pot and have not reduced your actual mortgage - you pay £500 therefore creating an overpayment of £20.

If you were to use the funds in the saving pot to pay onto the capital balance, the monthly payment required would reduce to £480 as the outstanding mortgage balance would only be £90,000. (But you would still have an available balance of £100,000 and therefore able to drawdown another £10,000 as and when required)

Hope this makes it clearer.

loubi-lou_2

overpayments show as 1 & 2 because they are made in 2 ways:

- where the mortagage holder chooses to increase the miminum mortgage payment & overpays by a fixed amount i.e £100/£200 etc etc, or chooses to pay a fixed amount instead the minumum mortgage payment i.e. normal payment £220...'i want to fix it to £300 each month'

-the offset interest abbey are giving you back each month because of your savings pot deposits (lump sums & above overpayments)

not sure which of the above is (1) or (2) but a call to their mortgage centre 0845 6000 346 will clarify