Overpayments and reducing term of mortgage

Hump

Can anyone explain how mortgage overpayments work? I called my mortgage company today to ask how long I had left on my mortgage (needing to review mortgage payment protection insurance etc) to be told that all my overpayments were now listed as a credit on the mortgage account and the term remained the same. So having asked and been told that they could not reduce the term I then asked whether I could have the credit refunded in order to pay the money in one go as a capital repayment - which would trigger a re-calculation. As you might anticipate I was told that this was not possible either.

OK so I guess I'm going to be told that this is perfectly normal, but the big question is..... does it matter? - apart from negotiating a lower MPPI premium? And if it does then anyone got a strategy that would work for the Nationwide stable of lenders?

MarkBargain

When I made overpayments with Nationwide I had the choice of either reducing monthly payments or reducing the mortgage term.

After making overpayments, check your interest rate is competitive as you may be able to get better deals with a lower Loan to Value (LTV) ratio.

gazter

Hump wrote: »

Can anyone explain how mortgage overpayments work? I called my mortgage company today to ask how long I had left on my mortgage (needing to review mortgage payment protection insurance etc) to be told that all my overpayments were now listed as a credit on the mortgage account and the term remained the same. So having asked and been told that they could not reduce the term I then asked whether I could have the credit refunded in order to pay the money in one go as a capital repayment - which would trigger a re-calculation. As you might anticipate I was told that this was not possible either.

OK so I guess I'm going to be told that this is perfectly normal, but the big question is..... does it matter? - apart from negotiating a lower MPPI premium? And if it does then anyone got a strategy that would work for the Nationwide stable of lenders?

Overpayment to reduce term of mortgage is not unusual, Im with hsbc at the moment, we first made an overpayment and i noticed that my mortgage went down by a few pounds, i realised that wasnt what i wanted. Contacted them to ask if i could reduce term, no problem.

Im just about to move to the Cumberland building society, again, no real problem (though they have some odd £400 rule, if you make more than a £400 repayment in one transaction it triggers a recalculation and a £40 fee. Make two or three £399 over payments in the space of a few minutes, and it is fine, a recalculation is done at the end of the month with no charge). The only limiter is the particular product reducing repayment over 10% of total remaining mortgage in any 12 months period.

Which lender was it?