Lump Sum payments...?

WidowTwanky_2

I've used the overpayment calculator and it's fantastic. But can anyone help me with this...
If I pay off a lump sum, the calculator tells me how much earlier I will finish paying.However, would a mortgage lender let you pay off a lump sum, keep the length of the mortgage term but then have lower monthly repayments until it was all paid off?

Also the Santander person on the phone told me I'd have to go into a branch to make a lump sum payment. Why can't I just bung some money to Santander online to save me the trip?

Baby_steps_2

Hi,

Most lenders reduce your monthly payment when you pay a lump sum, you normally have to ask to reduce the term!!! I don't bank with santander so no idea what their policy is but as long as you tell them what you want to do I can't see it being a problem reducing the payments (just check your small print first).

Have you also considered any charges you might get if you pay a lump sum? Some lenders will only let you overpay by a set amount eg 10% of the mortgage value a year or £500 a month. If you overpay more they will then charge you. It worth thinking about it just to make sure:p

WidowTwanky_2

That's helpful to know. I was really going on what the repayment calculator was saying, and that homes in on 'You will pay your mortgage off X years early'... So that's not the norm, the norm is you pay off a lump sum then pay less per month than you would have done. Right!
I feel embarrassed to say this, but for complicated reasons, I am still on the same mortgage that I took out in '89, and with the same lender. I'm not in any fixed rate or special deal, so I know that if I wanted to pay my mortgage off entirely (I wish), it would only cost me £50 to do so.
As for lump sum payments attracting a charge, yes, I'll triple check that.
Really appreciate your input. :beer:

SeriouslySeekingtoSave

My mortgage doesn't reduce the amount each month when I overpay; it keeps the same amount deducing from my mortgage its just that less is interest and more is principal - so, of course, my term gets shorter. I would have thought all mortgages were like that, certainly those which 'calculate interest daily'. But there are lts of different types of mortgages I guess :-)

Baby_steps_2

It totally depends on the mortgage company. Some will continue with the same monthly payment till you have overpaid by XX and then recalaulate your monthly payment so not reducing the term. If you specify what you want it to do when you make the overpayment then they can arrange that for you most companies will give you the choice.

Good luck with it, and why not consider keeping the same monthly payment the interest you will save can be massive and you will be rid of it sooner.:p

SeriouslySeekingtoSave

Baby_steps wrote: »

Good luck with it, and why not consider keeping the same monthly payment the interest you will save can be massive and you will be rid of it sooner.:p

And don't forget you'll also have the added bonus of becoming completely obsessive about reducing your term. Like the rest of us

WidowTwanky_2

I am now obsessed, yes! Can't believe how often I check into the overpayment calculator using it for different scenarios, as if my some miracle it will tell me 'You will pay off your mortgage by Christmas!':rotfl: