Can I pay a year (or more) of mortgage installments in advance with a lump sum?

mrobsessed

I've just been made redundant and have received a largish payment from my employer. Obviously I'm worrying about paying the mortgage when this cash runs out, so I'm wondering if I can give a lump sum to my mortgage lender that covers payments for several months in advance while I have the money and to remove any concern that it will be paid.

I'm not asking for the money to be paid off the balance, just to pay the installments in advance. If I could pay of the mortgage entirely, I would, but the lump sum is only about a third of the remaining balance.

The mortgage is quite low, so I could pay 2-3 years of installments and still have several thousands left from the payout. Can I do this?

Many thanks.
Mr O

R_P_W

Why would you want to if you are not paying down the balance?

okborednow

I think he means that he wouldn't want to pay say 20k which reduces the balance of the mortgage but then the company still expects him to make payments every month. I think he wants to pay 2-3 years of payments in advance so he has some breathing space without the mortgage to worry about while he finds a job.

In essence i guess he wants to make a large overpayment and then take a long payment holiday

R_P_W

Can u not just leave the money in the account and have the direct debit take payment as normal?

prowla

Or open a 2nd account and set up a standing order of the monthly amount for 12 months.

Goldiegirl

R_P_W wrote: »

Can u not just leave the money in the account and have the direct debit take payment as normal?

I can't really see the point of paying in advance, unless you are making a capital repayment

Once the money is paid into the mortgage, you can't have it back. What if you get a new job really quickly. You could then use your redundancy money for home improvements, a holiday, a nest egg, or any one of hundreds of uses. But if it been paid to the mortgage, then there's no choice - the money is used up.

Fair enough, if you don't get a job immediately you might need to use the redundancy money to pay your mortgage each month, but keep your options open, and just pay it each month as normal. The only difference is that the money will come from the redundancy money and not your salary.

Dave_the_Ginger_Cat

Generally you can, but you need to check that the lender is OK with it first, and be explicit when you pay

AFAIK most lenders calculate interest on a daily basis you so will still benefit from reduced interest, but just not from a reduced payment or loan term

Let_Us_See

Firstly, very doubtful as lender's do not have the processing and accounting facilities for "one off" payments unless it is a single capital repayment. Secondly, whilst I understand you strange logic, best you have the advantage of any interest that accrues on deposit rather than a lender. You just need a little financial discipline.

mysk_girl

Ask your lender. Nationwide will do this, but only on older mortgages, I think. We made significant overpayments to our nationwide mortgage, and then when I went on maternity leave, we asked that the payments be taken out of our overpayment reserve, which they did happily for 2 months. So it can be done with some lenders, but I only know about nationwide.

Dave_the_Ginger_Cat

Let_Us_See wrote: »

Firstly, very doubtful as lender's do not have the processing and accounting facilities for "one off" payments unless it is a single capital repayment. Secondly, whilst I understand you strange logic, best you have the advantage of any interest that accrues on deposit rather than a lender. You just need a little financial discipline.

Depends on your mortgage rate - I think you're unlikely to gain more on deposit than the mortgage interest you'd pay

John424

Set up a 2nd interest bearing account with one direct debit in it?