Overpayment translation

d70cw6

Hey

I've just remortgaged a £167k loan, and want to make overpayments on my new arrangement.

I'm confused a bit by the language used in my new mortgage. Per the T&Cs:

"Overpayments are permitted on this mortgage. A lump sum overpayment can only be made by cheque and is any amount that you pay to us in addition to the monthly payment due. When we receive a lump sum overpayment, we recalculate the amount you owe and the amount of interest you pay with effect from the following day. This means you get the benefit of paying less interest straight away. Regular overpayments can only be made by standing order and are amounts that you pay to us each month in addition to the normal monthly payment. When we receive a regular overpayment, we recalculate the amount you owe and the interest you pay from the first of the month after we receive the overpayment. The amount you owe will not be reduced immediately. Early repayment charges may apply and we charge an administration fee (currently £50) on each occasion – please refer to section 10 for details. However, during each financial year you can make lump sum and/or regular overpayments that will not incur an early repayment charge or an administration fee providing that (1) each lump sum overpayment is not less than £500 and (2) the total amount repaid does not exceed 10% of the amount owed at 1 April. If an overpayment is made which causes the total amount overpaid to exceed 10% then the whole of that overpayment will be subject to any early repayment charge due and an administration fee will be payable."

My basic monthly payment would be £875, and i want to increase this to £1,300 (hence £425 /month overpayment). Would i incur any penalties/charges for doing this?

Thanks

Foxy-Stoat_3

You will only get charged if you repaid more than £16,700 in the year but you would need to pay £501 or more every time

Looks like you will be fine but you could confirm with your lender.

d70cw6

Foxy-Stoat wrote: »

You will only get charged if you repaid more than £16,700 in the year but you would need to pay £501 or more every time

Looks like you will be fine but you could confirm with your lender.

will do - once they actually send me through my paperwork...

thanks

amnblog

Speak to your lender and clarify with them exactly what you want to do. Have them confirm how to set up such that you are not going to be subject to any charges.

d70cw6

Also given the way they calculate interest i presume the best time to make a monthly overpayment would be ~25th of each month to give it enough time to register before the 1st the following month?

Mrs_Rachel_Trelfa

My understanding would be that a regular £425 a month overpayment done as a standing order would be penalised as it's less than the £500 stipulated.

d70cw6

Mrs_Rachel_Trelfa wrote: »

My understanding would be that a regular £425 a month overpayment done as a standing order would be penalised as it's less than the £500 stipulated.

isn't that for "lump sum" overpayments via cheque?


god knows why they make these things so confusing.....


a simple table showing limits and an example from the lender would make these kind of things so much more transparent.

getmore4less

Next time go to a decent lender that has daily interest and credits all overpayments immediately without admin charges.

getmore4less

The quote refers to section 10 which is not included so any interpretation is a guess.

getmore4less

My guess to avoid overpayment fees & admin fees

Lump sum(cheque) £500+ credited anytime.

Regular overpayment standing order can be any size but only get credited on the 1st

Total must stay below 10% as of the 1April(ironic)

A standing order using faster payments should work near the end of the month

What does regular mean? A SO can be varied is £0 acceptable one month to remain regular or must it be at least £1?

Mrs_Rachel_Trelfa

d70cw6 wrote: »

isn't that for "lump sum" overpayments via cheque?


god knows why they make these things so confusing.....


a simple table showing limits and an example from the lender would make these kind of things so much more transparent.

Very true. I suppose it comes down to the definition of regular opposed to a lump sum as technically you could do 2 lump sums in one year. But then it says that regular by standing orders has to be each month.

So if you make a monthly overpayment it can be any amount but has to be each month with the total being less than 10% each year and if you make a one off or a couple of times through the year it has to be by cheque and over £500 and less than 10%