Help needed with understanding overpayments!

ssand

Hi everyone,

My husband and I have just started on the overpayment journey and need some advice/help in understanding some stuff.My apologies if it sounds a little silly...I thought I had better ask as we are planning to overpay regularly.

We are with Santander on fixed interest mortgage until April 2013 at 5.83%.We recently made a few overpayments in lump sum amounts and specifically requested that the payment go towards the capital owed hence reducing the term and that the monthly payments stay the same.

According to our documents and to them, we are allowed repayments of up to 10% of our outstanding balance with no charges. Each time we have made an overpayment, they have sent us a 'changes to your morgage letter' with all the info about the loan balance, term, etc. but each time they seem to change our monthly direct debit....we were paying 870.35 monthly before starting to overpay and now it has gone up to 871.69. They say that they have to recalculate things but there has been no charge. Is this normal?
Once again, sorry for asking a probably silly question but I wanted to be sure!

Thank-you!

Thrugelmir

In making a single lump sum overpayment. You won't have reduced the mortgage term by precisely a month. So Santander will be recalculating your future payments to do so.

Hence the small change in monthly payment.