Mortgage overpayment - Bank won't refund

janice247

Please accept my apologises if this post is elsewhere

I recently found out that I have overpaid my mortgage by £1700 (my mortgage standing order payment was £400) and I had been informed by an operative abroad (woolwich /barclays) that I would get £1000, back on 20th December . However I recieved a letter today stating that "that I can only get £54.17 as all prepayments are capitalised at mortgage year end in September. We are unable to refund an overpayments from the previous mortgage year.

I was told by opperative that my mortage would now gone down to less than £300 due to this (but I thought that the interest rate had brought this down). Anyway I have made a complaint but am I being 'too hasty' because if my overpayment has brought down my monthly payment would it be better for me to leave the money or take the money and run. either way I can afford to pay both amounts as they are extremely low.

Any advice would be helpful..

Janice

GMS

janice247 wrote: »

Please accept my apologises if this post is elsewhere

I recently found out that I have overpaid my mortgage by £1700 (my mortgage standing order payment was £400) and I had been informed by an operative abroad (woolwich /barclays) that I would get £1000, back on 20th December . However I recieved a letter today stating that "that I can only get £54.17 as all prepayments are capitalised at mortgage year end in September. We are unable to refund an overpayments from the previous mortgage year.

I was told by opperative that my mortage would now gone down to less than £300 due to this (but I thought that the interest rate had brought this down). Anyway I have made a complaint but am I being 'too hasty' because if my overpayment has brought down my monthly payment would it be better for me to leave the money or take the money and run. either way I can afford to pay both amounts as they are extremely low.

Any advice would be helpful..

Janice

If the repayments were made by direct debit you would have a case as this would be controlled by the lender. As you paid by standing order the amounts are set ny you therefore the lender is correct to treat as an overpayment. Even if your payments had been reduced to £1 you were still choosing to pay £400.

Personally I would continue to pay £400 if you can afford it. Keep an eye on the account and ensure balance is being reduced quicker.

janice247

ok Thank you for your speedy reply. I will consider you advice it makes sense in the long run.

jamesd

If you want the money back, ask them to adjust the monthly payment so that there's a capital payment deficit that adds up to the missing money over £54.17. Next September then can presumably capitalise that shortfall in capital repayments to put you back where you would have been. If you do this, be sure to confirm that they won't report on your credit record that there's an arrangement or missed payments.

Whether you're better or worse off from overpaying depends on your mortgage interest rate and tax rate. If you can get more from savings or investments after tax than your mortgage interest rate then you're worse off by the difference.

getmore4less

The capital overpayment will have reduced your monthly payment or the term so you don't lose money you save on interest.

If you don't need the money why get it back.


Barclays only recalculated payments once a year(allthough this is changing) unless you asked, they also have the oprion not to reduce on the annual change, they would have advised of the required payment on the last annual statement, have a look at you 07,08,09,10 statements, you may have been overpaying for more than a year.

dimbo61

Keep up the overpayments it will save you thousands of pounds in interest over the term.
The quicker you clear the mortgage the sooner you are Mortgage Free

northerner999

The original post does not specify motivation for trying to reclaim the money.

If you have no urgent need for the money (you suggest you can afford both amounts) I would be inclined to leave it, you will see benefits in reduced interest on your mortgage and/or a reduced term. Take it as a warning to keep an eye on the mortgage and be thankful that you will see benefits from this "overspend".