Overpaid 10% - Skipton reduced payments

MobileSaver

Eight years into an 18 year mortgage and I've just made my first ever overpayment of 10% of the mortgage (the maximum I'm allowed.)

However on reading another thread here and checking the reply from Skipton, I've now noticed they've reduced the monthly payment rather than the term.

I'm assuming the latter would have been better for me. Is this my error for not explicitly asking for a reduced term? Regardless, can I now write back to Skipton asking them to reduce the term instead - anyone else been in this situation before?

P.S. I'm just waiting on an endowment surrender cheque to turn up and then I'll be looking to remortgage anyway so not sure whether it's worth worrying about at this stage?

homer_j_3

they should reduce the term if you ask them to by keeping your payment at the pre capital repayment amount. It is better for you as the shorter the term the less interest you pay....

humfer

This is the same thing that Nationwide did to me when I made my first overpayment. If you call them up and say you want to stick to the same payments every month this will maximum the savings available by overpaying

humfer

humfer wrote:

This is the same thing that Nationwide did to me when I made my first overpayment. If you call them up and say you want to stick to the same payments every month this will maximum the savings available by overpaying

Also I have always used the site below to calculate just how much you can save by overpaying.

http://www.loanbright.com/edirectlending/calc_amortization.html

Thefunkygibbons

It is a shame that you are locked into a 10% overpayment allowance. Can you switch products to get away from this?

I was with the skipton and I asked them not to reduce the monthly amount

Say you could afford £1000 a month, and the overpayment reduced this to £900

If you instructed them to leave it at £1000 (because you could afford it) then you will be in that happy situation of overpaying every month and because they calaculate interest daily, the amount outstanding will start to decline rapidily

JezCooke

If you've already overpaid the maximum that you're allowed to this year then they have to reduce the payments or else each payment would be overpaying more (thus pushing the overpayments above your 10% allowance).

tanith

We are with Nationwide and you have to notify them that you want the overpayments to reduce the term... and do not pay a penny over £500 as there are then penaltys...

Gray0103

tanith wrote:

We are with Nationwide and you have to notify them that you want the overpayments to reduce the term... and do not pay a penny over £500 as there are then penaltys...

Or do what I do and overpay £499.99, it says in my t&C's they will reduce your payments if you overpay by £500 or more every month.

tanith

Well I pay £500 off every so often and because I informed them that I want the term reduced not the payments that is what happens....
Maybe your terms and conditions are different to mine...