Santander Overpayments: wording

Hi, just wondered if anyone can clarify the wording on my soon to be mortgage regarding overpayments:

"you may make additional capital repayments of up to 10% of the loan for each year. Overpayments in excess of 10% each year will attract an early repayment charge on the amount of the excess".

We are borrowing £90,000 on a 5 year fixed rate (should start September 2013) and are intending to overpay £750 (10% of the total loan) every month on top of the standard mortgage payment of £598

My question is, once we have overpaid every month for a year the balance will go down, does that mean that year 2, 3, 4 etc we cannot overpay £750 every month, we will have to reduce it to 10% of the new total of the loan, ie 10% of £75,500 at year 2 so 10% of that is £629 overpayment?!

I know it's an ambitious target so I don't even know if we will manage it, but we thought we would aim high :)

Thank you
"Adoption Loss is the only trauma in the world where the victims are expected by the whole of society to be grateful" - The Reverend Keith C. Griffith, MBE

Replies

  • SandstoneSandstone Forumite
    105 Posts
    Ninth Anniversary 100 Posts Combo Breaker
    Hi Tara,

    If that's the case, then perhaps you should have considered a mortgage product with unlimited overpayments. Most tracker mortgages have no such limits.

    The wording on your mortgage is ambiguous as to this point, so the best option is probably to ask them directly.

    Best of luck!
    Saving money for everything and everyone.
  • Lady_TaraLady_Tara Forumite
    137 Posts
    Thanks Sandstone, I think I'll ring them once its gone 7:00 and I can ring for free. We didn't go for unlimited overpayments as realistically we will be lucky to manage 10%, we just wanted to try and aim high :o
    "Adoption Loss is the only trauma in the world where the victims are expected by the whole of society to be grateful" - The Reverend Keith C. Griffith, MBE
  • cb4fwhcb4fwh Forumite
    158 Posts
    Eighth Anniversary 100 Posts Combo Breaker
    With the fixed product that I have with Santander, I am allowed to make an extra overpayment of £499 per month, and then 10% of the remaining balance in January (minus the £499 monthly overpayment already made that month).

    Definitely worth a call for clarification though!
  • ixiaixia Forumite
    1.3K Posts
    Mine is 10% off the balance payable per calendar year beginning in January.

    I was told that whatever balance is owing on the mortgage at the date in January it is 10% of that figure so after each year it will be 10% off the current balance not what you started with. Although you are probably right to telephone them and clarify.
  • I think you've got it right in your original post Tara, your 2nd year overpayments will drop according to your new balance.

    But as has been said, best phone and check.

    K_K
    Mortgage Paid Off 5th October 2013
    Back on with £71,000 July 2014
    Current Balance £58402
  • tea_lovertea_lover Forumite
    8.3K Posts
    ✭✭✭✭
    My mortgage is with Halifax but I was told the same as ixia (checked this with them yesterday so it's pretty clear in my mind for once).
  • I have a Santander mortgage and we are allowed to make ops of 10% of the balance at January 1st, so every year the amount of overpayment allowed goes down.
    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
  • Lady_TaraLady_Tara Forumite
    137 Posts
    Thanks for the replies everyone, I didn't get chance to call yesterday but it sounds like it will be on the new balance each year from people's experience. Thank you
    "Adoption Loss is the only trauma in the world where the victims are expected by the whole of society to be grateful" - The Reverend Keith C. Griffith, MBE
  • SundaysgirlSundaysgirl Forumite
    1.1K Posts
    See this thread...

    http://forums.moneysavingexpert.com/showthread.php?t=4575599&highlight=santander

    Probably still worth checking with them, but I know that this is how it works for me! Good luck on your MF journey :)
    MFW 2017 #123 2018: £1,852.64/£39,200 (4.7%)
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