Help - New Mortgage from Advisor but problems!

CeePeeBee

Hi Guys,

Right, long story short we consolidated my debt into our mortgage and got a 112K mortgage at 4.4% which left a monthly repayment of £815 over 16 years (5 year fixed term) with ING Direct. £89k of that was mortgage and £23k of that was my debt.

This was after a couple of months dealing with an independent financial advisor. We were consolidating and wanted to make sure figures and the like added up.

Anyway, the idea was that I would then over pay by £400 per month for 60 months to effectively pay the £23K over the 5 year term. We had a number of meetings with our "advisor" who agreed with my spreadsheets (was trying to do things right!).

Anyway I organised with ING via their website to over pay by £400 per month. This month, when that hadn't come out of our account, I rang them. Their response was that with their Fixed Term products there is no monthly flexible over payment process. We could however make Capital Repayments of a minimum of £1000 up to a maximum of 10% of the original loan amount.

Fine I said, I'll pay £1200 per qtr (instead of 400 per month) and do it that way. The rep then said that this would mean the monthly mortgage payments would drop, or the loan term (16 years) would be shortened.

Obviously we want to continue paying the same amount on the mortgage and over payments in order to realise the same position after 5 years. However I'm not sure what reducing the loan term would dop to our payments and whether my over payments would have the same affect over that 5 year period?

In fact, I'm totally livid that the discussions I had with the financial advisor (we went through this at least 5 times at our house over numerous weeks) didn't turn up this incredibly useful nugget of information that could now potentially wreck our carefully laid plans.

Call me whatever names you want (naive etc..) but when I did the spreadsheets and he said "yup, you're right" 5 times, I started to believe it. The fact that we'd gone over this so many times and had carefully budgeted means that if this is wrong it could cause us some SEVERE repercussions.

Can anyone help and let me know what position they think I'm in currently?

I'm awaiting for him to return my calls so I can shout...lots. :mad::mad:

maninthestreet

What are you worried about? The monthly mortgage payment will be reduced, or the mortgage term shortened, to take into account the overpayments, but the mortgage will still be paid off.

Thrugelmir

CeePeeBee wrote: »

Can anyone help and let me know what position they think I'm in currently?

I'm awaiting for him to return my calls so I can shout...lots. :mad::mad:

Unsure what your complaining about. You are allowed to make annual overpayments on the mortgage far in excess of those you wish to.

If you shorten the term your repayments will continue at the same level.

Seems as if you are getting very excited over nothing.

Wh05apk

Reducing the term, will keep your payments as you are now, which presumably is what you want?

With regards to your advisor, did you ask him "are my figures right?" or "can I increase my direct debit by £400 pm?" I suspect it was the first (or something simialr) and doubt you actually asked re the mechanics of repaying the £400 per month?

CeePeeBee

Thanks for your replies.

After calming down a bit, and thinking about the reduce in mortgage term, I believe that this will still give me exactly the same outcome as I required.

As for what I asked the Financial Advisor...the very first question I asked when the mortgage product was picked was "How do we make over payments and what effect does that have on the overall payment plan?" This is perhaps more why I'm mad than the actual ING Direct response.

Still, I'll triple check that all is good tonight and we'll see how things stand.

Cheers for your responses guys.

kingstreet

CeePeeBee wrote: »

the very first question I asked when the mortgage product was picked was "How do we make over payments and what effect does that have on the overall payment plan?"

Which I would have answered by saying you'll have the choice of a reduction in the monthly payments, or a reduction in the term. As you wish to pay the mortgage off quicker, the latter option is best for you.

Morgage_Confused

you will owe about 57k on your mortgage after 5 years with those kind of overpayments.

if you kept up those payments you will finish your 16 year mortgage 6 1/2 years early.

sounds like a great plan to me