Mortgage overpayment

rowly731

Hi everyone

We recently started a new mortgage (25 years but 10 year fix @ 4.99% on £99k) which allows overpayments of 10% of balance each year. Our monthly payment is approx £570. When we applied we asked for clarification that overpayments could reduce our term rather than our monthly fee and were told that this would not be a problem. I setup a regular payment of £680 (£570 + £110 overpayment) and asked that this decreases our term rather than our monthly fee but was told that the only way to do this would be to change our actual term officially and move to an offset mortgage.

We hope we can maintain our overpayment butwould like the option of cancelling it if needed so would rather stay at on our current deal. We wanted to overpay to decrease our term after using the overpayment calculator Martin provides showed significant savings.

My question is will we achieve the same result (ie paying off mortgage approx 6 years early and saving alot of interest payments) if we continue paying £680 but the mortgage providers consider these as payments to reduce our monthly fee?

Thanks in advance

tinktay84

my mortgage provider did start to rduce te dd amount in line with the overpayments but as long as ou continue to pay the same amount you will end up with a shorter term. If tey do adjust your DD just set up a standing order for the difference.

I cancelled my DD in the end and just have a standng order now that they cannot adjust, they may not lt you do that though but you can always do the extra amount via SO if they do decrease.