Overpayment wording query

leanneee

Hi all, this is probably very basic but I wondered if someone could tell me how much overpayments would be allowed (without penalty) with the following wording in my boyfriend's mortgage contract.

It says "Partial repayments will be allowed which in total in each Calendar year, from Release of Loan, must not exceed 10% of the balance of the Loan outstanding."

I take "Calendar year" to mean from the date the mortgage was taken out rather then January to December - is this right? I don't really understand how to calculate the 10% though - it's a fixed rate mortgage at the moment so would it be 10% of the Outstanding balance that's on the Annual Mortgage Statement or is it 10% of this minus 12 x monthly payments?

I don't know if I'm making this very clear or not but just for example for £100,000 with payments of £500 per month, could he repay £10,000 extra or 10% of £100,000 - (£500 x 12 months) = £94,000 so £9,400?
These are not real figures obviously just made up for ease!

Thanks in advance for all your help! Oh and also - is there a calculator that you can use to work out how much quicker you could pay this off if you made the maximum overpayments anywhere that anyone knows of?

beecher2

If I made a 10% overpayment today, I wouldn't be able to make another during the next 12 months. The 10% is calculated on the existing balance but I'd always phone up to check how much you're allowed to overpay.

type locoblade into the search forum and you'll find a great tool to work out the impact overpayments will have

edit: here it is here

http://forums.moneysavingexpert.com/showthread.html?t=1157173

Joe_Bloggs

leanneee said:-

I take "Calendar year" to mean from the date the mortgage was taken out rather then January to December - is this right?

I think the more common interpretation is that the Calendar Year refers to the period starting 1st January and ending 31st December.

There is a lot of experience of the many lender specific overpayments schemes on the MSE Mortgage-Free Wannabe Forum.
J_B.

Dan_1976

Calendar year is a calendar year, Jan-Dec. 10% is normally calculated on the balance at the time you make the payment.

Be aware that if your charged interest annually your payment will not save you money until the year end.

As Mr Bloggs points out, lender specific info is available. It does differ so I would take a look.

redpete

Calendar year is almost certainly Jan 1st to Dec 31st.

The 10% in our case (Coop) is taken as 10% of the amount outstanding at the begining of the year. But that's almost irelevant for you - best source of info about what the terms of your mrtgage agreement mean is your mortgage lender, they can give you relevant facts rather than opinions.