Mortgage overpayments and interest calculated

daisy_bumbleroot

I put this on a differ forum, but didn't quite get the answer I to the Questions I asked, not to worry, I'll ask here as its a mortgage forum.




Went to see the mortgage people at the weekend to see if we can get a better deal. We cant - negative equity. Never mind.

But we have been paying £100 a month extra for about 15 months now and when the lady looked at our statement, she said that she would have expected to have seen the payments due coming down or the term shortened, neither of which was happening. I'm pretty sure it's a daily interest rate.

I called Nram yesterday and they said that the term will stay the same, they cant change that and they didnt automatically recalculate the interest unless we told them to. So I told them to. I also asked them to backdate the interest recalculation but he couldnt do that either.
On the statements it says that the payments are recalculated if it's over £500, but not if it's under.

I asked if it was better for us if the payments were recalculated each time we overpaid and he said yes. He said "why dont you call up eveyr few months and get it recalculated" and I said "well, if its going to be better for us, Im calling every month!" I dont understand why though. Will it mean that we pay more off the capital each time now? Does it mean that the £1500 we have given Nram has been earning interest for them and not us!? Is there any point to us ringing each month, WILL it make a difference?
!

RenovationMan

I don't know much about NRAM I'm afraid but other lenders have minimum overpayment levels (I think mine is £1000) and I assume that they simply retain your £100 payments in a zero interest account until they reach £500 and then pay them onto the mortgage balance. It might therefore be better for you to save up the £100 overpayment in your own savings account and pay them onto the mortgage once they reach the minimum OP level set by your lender. At least you'll receive a bit of interest on the savings in your own account.

daisy_bumbleroot

RenovationMan wrote: »

I don't know much about NRAM I'm afraid but other lenders have minimum overpayment levels (I think mine is £1000) and I assume that they simply retain your £100 payments in a zero interest account until they reach £500 and then pay them onto the mortgage balance. It might therefore be better for you to save up the £100 overpayment in your own savings account and pay them onto the mortgage once they reach the minimum OP level set by your lender. At least you'll receive a bit of interest on the savings in your own account.

ah righty o then, think ill call and if this is the case...

thanks