reducing balance

stewarta13wsb

I had planned to transfer some savings and pay off a bit of my tracker mortage. However.... due to admin delays the cheque has arrived too late to 'hit' the end of the year adjustment time (it was end of September)

I was aiming to reduce next years monthly payment but although I now can't, are there still benefits to be gained from paying off around £8000 although I may not see them until next year.... interest at least surely?? Or should I stick it in a savings account for 12 months?

Mrs_Z

Assuming you have no penalities for overpayments, you can pay off at any time, you do not need to wait until the statement time. Simply send off the cheque to your lender making clear that it is a capital overpayment and ask them to write to you what the new monthly payment will be.

Re: paying your mortgage vs. saving accounts - depends on the rate. If your mortgage rate is higher than your savings, then you're better off paying off from the mortgage. It is recommended though to have some savings say; 6 months salary for any unexpected events and obviously clearing any other debts first which are bound to be on a higher rate.

stewarta13wsb

Unfortunately, after a call to 'Woolwich India' I've had confirmation that in the terms of my mortgage they only recalculate the monthly payments once a year
But presumably in a years time it will drop by even more as I'll have been paying too much for a year?

Thrugelmir

Switch you mortgage onto a product will calculates interest on a daily basis.

CLAPTON

two different things

-recalculating monthly payments after a lump sum overpayment
-how is interest calculated; on the daily balance, monthly or yearly

you need to read the T&C of your deal.

Morgage_Confused

They are wrong m8, trust me they dont know what they are talking about in the Mumbai call canter. I mean no disrespect but I have had a complete load of rubbish told me by the staff there regarding overpayments.

Basically it goes like this......
Pay more than 3 times your monthly repayments as an overpayment and you will get a letter informing you of the new monthly payment figure. That is they recalculate by default.

Pay less than 3 times your normal payment as an overpayment then the balance will reduce immediately(and therefore less interest charged and reduced term)but your monthly payments wont be recalculated.

Once a year(about now actually) by default they recalculate anyway, taking all the small overpayments into account and then informing you of your new monthly payment figure.

Now at any point you can ring them up yourself and tell them to put all the small overpayments towards reducing your monthly payment. Like a forced recalculation.

Also at any point you can tell them not to reduce the monthly payment, whaich is what I do as I want to pay off the mortgage as quickly as possible. I always tell them to keep my monthly payment the same. I did this for example with the last yearly statement a couple of weeks back.

enjoy:beer:

stewarta13wsb wrote: »

Unfortunately, after a call to 'Woolwich India' I've had confirmation that in the terms of my mortgage they only recalculate the monthly payments once a year
But presumably in a years time it will drop by even more as I'll have been paying too much for a year?