Overpayment confusion. Please help.

edward_scissorhands

Hello,

I really hope someone could help us in this matter. We have our mortgage with Woolwich. We moved into our new home in June 2011 and started the mortgage payment from that month. Our monthly payments are £932.59. We started overpaying from the month of January 2012 to £1432.59.

We were told that we were able to overpay a maximum of 10%. We received a Redemption Statement today and it the letter it mentions something that I find difficult to understand:

Balance brought forward: £187305.30
October 2011 Payment: £932.59 (Credit)
November 2011 Payment: £932.59 (Credit)
December 2011 Payment: £932.59 (Credit)
January 2012 Payment: £1432.59 (Credit)
February 2012 Payment: £1432.59 (Credit)
27/2/2012 Early Repayment Charge: £5526.87
27/2/2012 Final Repayment Charge: £275.00
27/2/2012 Interest: £2586.84
27/2/2012 Total amount due: £190031.06

I had a telephone discussion with people at Woolwich prior to starting the overpayments who told me that the overpayments were not over the 10% and I could pay maximum 10% of the total amount per year without incurring any charges. But I fail to understand why I have been charged almost £10,000. I tried to call their helpline but there is no response.

Do hope someone could guide us. Thank you very much for your advice.

Kind regards,
Edward

Ps: I have also posted this in Mortgage free wanabe.

dreamalittle

Don't worry! If it's a redemption statement, they'll calculate it as if you were paying everything back on the day they produce the statement (in your case, 27/02/2012) - including any applicable ERCs at the time. You haven't actually been charged this amount, it's just what you would need to pay if you redeemed the mortgage today.

edward_scissorhands

Thank you dreamalittle. That's a big relief