Not allowed to stop overpayments!!!

Greenst

I was talking to a chap at work today about mortgages, he's been overpaying on his mortgage but now he's split with his partner has asked if he can go back to paying the normal mortgage rate as the house is up for sale and the bank has said no!
I am in disbelief as I thought that over payments were voluntary and that if at anytime they could not be paid then you can revert to the standard mortgage monthly payments?

Thrugelmir

Your colleague may have changed their mortgage terms. So not just making overpayments.

Greenst

Will ask more on Monday!! I was just concerned as I am making, modest, over payments but if my income was to drop any more than it is for any reason I would not be able to make these payments. I was under the impression that they could be stopped at any time.
In what circumstances would the mortgage be changed then so that you can't stop overpaying? Do you mean the term reduced?

Thrugelmir

Greenst wrote: »

Do you mean the term reduced?

Yes. The original terms would then no longer apply.

holly_hobby

Yep if he asked his overpayment to effectively reduce the term, thats why he is stuck with it.

If you are simply overpaying to reduce the balance on an ad hoc basis, then no, the overpayments are not contractual and therefore are not mandatory.

As always, checking this directly with your lender to satisfy your own mind, is highly recommended.

Hope this helps

H

SG27

holly_hobby wrote: »

Yep if he asked his overpayment to effectively reduce the term, thats why he is stuck with it.

If you are simply overpaying to reduce the balance on an ad hoc basis, then no, the overpayments are not contractual and therefore are not mandatory.

As always, checking this directly with your lender to satisfy your own mind, is highly recommended.

Hope this helps

H

Surely all overpayments will reduce the term? Ovewise there would be no point making them?

arbroath_lass

SG27 wrote: »

Surely all overpayments will reduce the term? Ovewise there would be no point making them?

If I overpay my mortgage by £500 in a lump sum I can either choose to reduce the term of the mortgage OR reduce the monthly payment due from then on.

holly_hobby

SG27 wrote: »

Surely all overpayments will reduce the term? Ovewise there would be no point making them?

Obv reducing the balance will effectively reduce the term as the os debt will be repaid earlier than scheduled - however applying the overpayment to the balance will leave future options open to suspend/whold payments when months are tight, whereas once the term has been physically reduced the lender won't always re-extend it.

Hope this helps

Holly