New mortgage and overpayments

livalicious

Hi guys,

Sorry if this has been asked to death, but we just recently completed on our first home, and I would like to overpay on the mortgage, but after some advice first.

The mortgage gets paid through my partner's bank account, but I would like to pay about £50pm on top of the monthly repayment. Ive been advised to set up a standing order to do this, but it would not be a capital repayment, only if its £500 or over. So could someone please explain whats the best way of doing this. Should I just keep saving each month, and then overpay £500 or over when Ive saved enough so that this comes off the capital. Or does it make no difference if you overpay a small amount monthly, what difference does this make to the mortgage?

Hope what Im trying to say makes sense.

DansMum_2

I'm sure someone will be along who knows more about this than me, but would an idea to open an account with decent interest and save the money that way? Maybe put in a s/o of £50p/m as you say then leave it for 12 months then transfer it to the mortgage??? I maybe barking up the wrong tree but an idea?

tincans

livalicious wrote: »

Hi guys,

Sorry if this has been asked to death, but we just recently completed on our first home, and I would like to overpay on the mortgage, but after some advice first.

The mortgage gets paid through my partner's bank account, but I would like to pay about £50pm on top of the monthly repayment. Ive been advised to set up a standing order to do this, but it would not be a capital repayment, only if its £500 or over. So could someone please explain whats the best way of doing this. Should I just keep saving each month, and then overpay £500 or over when Ive saved enough so that this comes off the capital. Or does it make no difference if you overpay a small amount monthly, what difference does this make to the mortgage?

Hope what Im trying to say makes sense.

You need to ask your lender the following.

1) Is there a penalty for over-paying ?
2) Is interest calculated annualy or daily ?
3) Whats the maximum you can overpay each month / year ?
4) Whats the minimum amount you can overpay before its counted as a payment against the capital. Did your bank advise on the £500 bit ?

Without this info, its all a bit of a guess.

bluekp

Who is your mortgage provider?

Abbey for example say in their mortgage T&Cs that minimum capital payment must be £500+, however when you actually ask them they "prefer" it to be over £500. Have Abbey mortgage and been making successful overpayments of <£500

Might be worth asking the question

RenovationMan

Why are you not paying the mortgage from a joint account? Is the mortgage in both your names?

uzubairu

RenovationMan wrote: »

Why are you not paying the mortgage from a joint account? Is the mortgage in both your names?

What has that got to do with anything?

Currently pay ours out of a account in just my name for the past 8 years.
The mortgage is in both our names.

RenovationMan

uzubairu wrote: »

What has that got to do with anything?

Currently pay ours out of a account in just my name for the past 8 years.
The mortgage is in both our names.

It has something to do with a couple of things, actually. The first is that if the mortgage is not in joint names, then the OP for her own protection, should not make overpayments into it until it is in joint names.

The second is, if the mortgage is in joint names, but paid from a non-joint account and the couple arent married then it looks for all the world that only one person is paying the mortgage. If the couple splits up, that one person could make a very good case for keeping most, if not all of the house equity.

I'm not usually so negative, but when I saw that the OPs joint mortgage is paid from her OH's account, it sent alarm bells ringing. There is absolutely no good reason why joint outgoings are not paid from a joint account, and if someone insists on this arrangement then I'd be very suspicious of their motives. If the couple is married, then there is more protection, but there can still be some 'horse trading' about who put more money into the house and who is therefore entitled to receive more out of it, especially if there are no children involved.

livalicious

The mortgage lender is Nottingham BS, and you are allowed to overpay by 10% each year, the minimum for capital payments are £500, no penalties either. I am going to put aside money in my savings account each month anyway, I just wasnt sure whether it would be best to also overpay the mortgage each month, or just put all the savings in one pot, and then put a lump sum in once a year or every so often.

It is a joint mortgage, but we do not have a joint account, and my partner pays for the mortgage, and I pay everything else. I have basically worked out exactly how much we each put into buying the house, moving costs, deposit, monthly mortgage and estimated bills. From that I worked out the percentage of what we each put in, should we ever split up and need to work out who gets what. Might seem a round about way of doing it, but it works for us.

black_taxi_2

should we ever split up and need to work out who gets what.


you need it legaly tight