Mortgage Free Wannabe...but stumbled at the first hurdle

I have a Santander Fixed mortgage, fixed until February 2014, at 5.54%. I've been wanting to start overpaying for a long time, and phoned them the other week to check I was able to start making overpayments....I was advised that I could. I'm currently not able to make large overpayments due to not having loads of spare cash, so I made my first mortgage overpayment the other week and overpaid £50 at my local branch. I then had to phone up Santander Head Office and advise them that I had made the overpayment and whether I wanted it to reduce the term, or the amount payable...I chose to reduce the term.

All well and good, or so I thought. I received a letter from Santander the other day to say that they had received my overpayment and that they would be reducing my monthly amount.

I telephoned them up and asked why they had reduced my payment amount and not the term, and the gentleman on the phone advised me that for them to be able to reduce the term, I would have to make payments of £150 or over for it to be effective. Anything less than this would go towards reducing the amount instead. I was never advised this fact when I initially rang Santander to check if I could start making overpayments...and at the minute, I'm in no position to make payments larger than £50... :(

Is anyone able to let me know if this is common practice with Santander? I keep reading all your diaries, and some of you are able to make smaller overpayments than mine...why is that? - is it because you are with a different lender?

Any advice would be gratefully received...what was due to be the start of an exciting time in my life, has left me a sense of unhappiness about it all :( Thanks for reading.
Mortgage at Jan 2009 (when the house was purchased): £75,000
Mortgage at Jan 2017 (when I could officially start overpaying after 7 year relationship from hell ended): £60,000
Mortgage at October 2021: £39,783
Hoping to be mortgage free by June 2023.....9 years early.....(a girl can dream...)
2021 MFW #49 £1,840 / £2,500
2020 MFW #49 £3,350 / £2,500
Overpayments: 2017: £500/2018: £250/2019: £1,950

Replies

  • edinburgheredinburgher Forumite
    12.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper
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    My Santander mortgage paperwork says that I can't make OPs smaller than *£500*
  • CalfurayCalfuray Forumite
    1K Posts
    Uniform Washer
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    I don't have a Santander mortgage, I'm with Nationwide, which is why I can pay pennies etc as I want. I think the user edinburgher has a Santander mortgage... I'm sure somebody mentioned this before.

    Either way, don't be disheartened, you could open up a basic savings account, chuck your money in there and once it reaches £150, then transfer it over.
    Alternatively, you could pay money to reduce your monthly payments, say you pay £450, keep paying money until your monthly payment becomes £350 let's say, then you can set up a standing order for £150, taking your payment to your normal £450 plus £50 overpayment, effectively doing the same thing :)
  • CathTCathT Forumite
    7K Posts
    Part of the Furniture 1,000 Posts Name Dropper
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    I've heard of similar issues with this bank. I agree about setting up the savings account and make 3 monthly OP's. Sounds like you are able to start looking around for a more competitive deal soon anyway so when you do so just double check their OP rules. I can pay what I like with my provider. Don't let it dishearten you, I was so excited in the early days of making OP's, I just think banks don't like the fact you're saving money and make it as difficult as possible!

    Having a diary is always brilliant for motivation and support. Not everyone 'gets' overpaying the mortgage and it's good to be around like minded people!
    Dec 2021 - part 1 - £49,741 part 2 - £33,296
    Total - £83,037
    71 months to go!

  • Matt_The_ChippyMatt_The_Chippy Forumite
    264 Posts
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    I'm with Santander and have to say they have been brilliant for me and our position. We have the Offset mortgage and that allows any size OP. Sounds like you need to get to the end of your deal, then shop around for a more flexible product.

    Best of luck with it.
    Mortgage at Highest- £126.995 Aug 2006
    Mortgage- (Lightbulb moment, Sep 12) £95,571. (Jul13) £92,616 (Oct14) £88,224
    OP Since Sep 12- £11,401.13, currently £8,416
    Original Finish Date- Aug 2032
    Target Date Aug 2020 :D
  • gallygirlgallygirl Forumite
    17.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Mortgage-free Glee!
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    Well, if they cut your monthly payment by £5, that's £5 spare towards your next OP :T. Then £10 etc, till you change mortgage. Will all work out the same in the end :D.
    A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort
    :) Mortgage Balance = £0 :)
    "Do what others won't early in life so you can do what others can't later in life"
  • lulabelle1lulabelle1 Forumite
    2.7K Posts
    Tenth Anniversary 1,000 Posts Combo Breaker
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    Agree with GG - so long as you OP any reductions, then it all works out the same in the end... so, don't feel disheartened about it any way.

    Most importantly, congrats on taking the decision to try and pay it off quicker, best of luck for your MF journey....
  • kirstyparkkirstypark Forumite
    771 Posts
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    it will all work out the same in the end. I reduced our term initially as liked seeing the end date come closer, but had to port our mortgage onto a new home and ended up increasing the term again to give us some flexability. Either way, you are still paying off interest.
    mortgage 1 33,000. paid nov 2012 :D. mortgage 2 87,000 due 51,686.76 at july 2013, but then:new home and remortgage ... £101065.43:eek: now 74k
  • ixiaixia Forumite
    1.3K Posts
    Hi I have a Santander mortgage too. If you want to reduce the term you have to pay enough to cover 1 month. For me thats about £270, you said yours is about £150. If I pay £500 it knocks 2 months off.

    So like the others have said I just put it into a savings account until I have £500 as I like to see the 2 months coming off.

    I have just started out on making OPs too good luck!!
  • Don't feel down about it, it's all a learning curve. I can't OP at the moment but we are saving the money away until we are allowed to. If I wanted to do the little OPs like tidying up bank accounts for pennies at the end of the day I think I would put it in a seperate saving account, so it was out of sight and out of mind. You can still be a hardcore MFWer, we all just have different rules to play by! :D
    MFW start date:22.6.13 - £138555 9.7.13 - £125937
    MFD: [STRIKE]November 2039[/STRIKE] October 2035

    2013 OP: £14172
    2014 OP aim: £0/£3000
  • leungerleunger Forumite
    33 Posts
    as said before, it all gonna work out the same.
    i would even say they actually do you a flavor for reducing the payment instead of term, as that mean you will have more flexibility with the spare cash to either use it on something else or save it toward a bigger OP down the line, specially that you are close to the end of your deal.
    don't worry about too much re the length of the term if you are planning to remortgage and shop around at the end of each deal.

    good luck
    It is not impossible, its just improbable
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