Hi quick question about overpayments

Giant_Space_Lizard

Hi there,

Ok so getting a mortgage with Santander for 57k.

For overpayment they say i can make capital repayment upto 10% per year, (a minimum overpayment being £500).
ok great so i have these questions;

1. What exactly is meant by 'capital' repayment as opposed to just a normal repayment?

2. so if 10% of 57000 is 5700. Does this mean in theory I can make 11 repayments of 500 in the first year?

Thanks very much for any help

[Deleted User]

Capital repayment mans that it all comes off the capital (as interest will have been paid with your regular monthly payment).

Check the terms to see how the 10% is calculated - whether it is of the balance at the start of the year or on a moving basis.

Giant_Space_Lizard

great thanks.

Also if i made the overpayment, would it mean that the length of the loan goes down, or the regular repayment amount goes down?

[Deleted User]

Policies vary, so again you would need to check and specify what you want to happen. The Santander FAQs imply that shortening the term i the usual objective, so I would expect that to be the default impact.

But when I first overpaid with Nationwide, they intitally recalculated and lowered my monthly payments and I had to ask them to keep payments the same.

Giant_Space_Lizard

thanks zx, I will phone them tomorrow.