The Mortgage Works - Overpayments

hufc2002

I am looking to make overpayments on my mortgage following coming to the end of a 5 year fixed rate at 6.39% to the Mortgage Works variable which is 1.99% above the base rate therefore 2.49%.

The change of rate has reduced my mortgage by nearly £220 per month so in an ideal world I would like to carry on paying the additional £220 on top of my new monthly payment.

Is this allowed and are there any charges for doing so?

I currently owe £100k with 25 years remaining so would like to pay the additional to get the term down while I have the money.

According to the overpayment calculator, if I carried on over paying by £220 per month, the mortgage would be paid off in less than 15 years.

Advice would be welcomed.

Yorkie1

What does your documentation from when you took out the mortgage say (the KFI / offer)?

hufc2002

Mortgage was originally fixed term so will the Ts and Cs still apply now that it is variable?

Yorkie1

It depends on whether there was an extended tie-in. Which would have been set out in your initial documents.

hufc2002

Haven't got them to hand but a far as I know there wasn't an extended buy-in

hufc2002

Are there any general rules about overpayments?

The monthly overpayment I want to make is approximately an additional 49% more than my current monthly payment.

kingstreet

There are no general rules, no.

What applies is what was agreed with your lender at the outset. You need the KFI or mortgage offer which will answer your question, if you don't want to ring TMW and ask them.

hufc2002

As stated previously when I originally took the mortgage out it was on a 5 year fixed term therefore will this have any bearing on what is in the KFI?

kingstreet

The key facts illustration, or the mortgage offer, will set out the period for which penalties would be payable in the event of overpayment. By definition, you would also be able to work out when that period ends, from the same information.

If you can't, or don't wish to find them, a simple call to the lender will get you an answer to your question.

You need your account number and 0845 45 45 800.

Unless you can find someone on here who has exactly mirrored your situation, the only definitive answer is via one of the routes suggested.

hufc2002

I have just had a look at my mortgage offer and section 11 says:

You can make lump sum or regular overpayments of up to 10% of the mortgage, in each complete 12 month period from the date the mortgage starts until 31st December 2012 (this in when my fixed term ended) without having to pay an early repayment charge.

After 31st December 2012 there are no restrictions on the mounts that you can overpay.

If you make an overpayment the amount you owe us will be reduced immediately, and the amount of interest you pay, will be reduced from the first day of the following month.

I read this as I can overpay as much as I want I.e. the £220 extra I want to pay without being penalised. Also sounds like interest is calculated at least monthly.

Please can someone confirm?

Yorkie1

Yes you can overpay as much as you want.

Not sure about the interest issue.