Overpaying to reduce term

waterman3

i don't think that's right. The bank told me i could EITHER overpay to pay reduce the outstanding capital or to reduce the term.

hasselhoffisevil

waterman3 wrote: »

i don't think that's right. The bank told me i could EITHER overpay to pay reduce the outstanding capital or to reduce the term.

The would have told you that you can either reduce the term or reduce your monthly payment and keep the term the same. You probably weren't listening correctly.

CLAPTON

waterman3 wrote: »

i don't think that's right. The bank told me i could EITHER overpay to pay reduce the outstanding capital or to reduce the term.

that is incorrect..well they either mis-understand how mortgages work or maybe mis-understood your question

overpayments DO reduce the capital and so reduce the term..obviously so
because if you pay more each month then the number of payment must obviously reduce. (otherwise why ever would anyone do it? it would be complete madness)

if you reduce the term that means you pay MORE each month which reduces the capital

they are just diffeent ways of looking at the same issue

beecher2

waterman3 wrote: »

i don't think that's right. The bank told me i could EITHER overpay to pay reduce the outstanding capital or to reduce the term.

As others have said, this isn't correct - phone up BoS to have it explained to you again. The options are to reduce the payments or the term - either way the capital goes down. Where else would the money be going?

Boozer

http://www.moneysavingexpert.com/mortgages/mortgage-calculator

go and have a play around with this and see how things work, write down how much and % rate over 20 years, then work out the same loan and % rate over 25 years, write down the difference and add that as an over payment to the 25 year term, this will show you how much earlier your loan will be paid off, and also how much you could save.

waterman3

so whether you overpay to reduce the term or overpay to reduce your monthly repayments, however much you overpay by is how much your outstanding capital amount reduces?

oscardog

waterman3 wrote: »

so whether you overpay to reduce the term or overpay to reduce your monthly repayments, however much you overpay by is how much your outstanding capital amount reduces?

Stop the clock!!

waterman3

does that mean "by george i've got it"?

House_Hunter

The sound of pennies dropping all around......