Overpayment - What would you do?

SOMEONE_3

Well it looks like part 2 of the plan won't happen.

Apparently I've failed the affordability, partly because of my recent overpayments. It appears I was already at my borrowing limit when I started to make those overpayments, and despite overpaying £106,000 in the last few months, when they calculate the affordability it takes into account that I still have borrow-back access to that £106,000. So anything I borrowed in addition would take me over my maximum.

I questioned why then I was at my maximum when my salary has increased by £10,000 recently, or why in fact it's not hugely higher than when I first took this mortgage 7 years ago on a salary another £20,000 lower, but he put that down to my dependants. At that time I had 1 child and a low earning working wife, now I have 3 children and a housewife - and the affordability takes all of that into account, not just your salary.

Not the end of the world. I've still switched loan 2 to a lower rate, paid off 70% of loan 1 and will continue to make overpayments. I can still borrow back in 3 years time (if the base rate hasn't moved) at 2.5% and overpay any other loan I want, I just can't reduce the 5.34% that loan 1 is currently at by moving the debt around.

The only alternatives are to either pay the ERCs and end the fixed deal, or request they remove the borrow back facility, but neither are something I want to do as it makes sense to keep that account active with that facility running for future-proofing.

JimmyTheWig

That's a shame.
Can they reduce the amount of the borrowback facility?
I know that it's nice to have, but I don't believe you _need_ £106k borrowback right now.

But, as you say, other than that it's going well. This borrowing extra was only the icing on the cake.

SOMEONE_3

JimmyTheWig wrote: »

That's a shame.
Can they reduce the amount of the borrowback facility?
I know that it's nice to have, but I don't believe you _need_ £106k borrowback right now.

But, as you say, other than that it's going well. This borrowing extra was only the icing on the cake.

They said they could remove the facility altogether, but not sure about reducing it. I suppose if it's reduced it can't be increased again. To be honest, it's probably wise to leave that facility alone, you never know what's around the corner. Whilst my entire debt to them exceeds £106K, there's no point in messing with it

All else has gone to plan, so thanks very much for your help