Can someone advise? silly question...

Elsbells21

Hi All,

Actually still waiting on mortgage offer, but was interested to know the answer to a probably really obvious question...

In the terms of the mortgage it states overpayments are:
"restricted to 10% of the outstanding balance per year. A capital reduction of 10% per annum can be made without incurring an early repayment charge. This will apply throughout the early repayment charge period."

So does that mean if I wanted to overpay I would subtract the total amount I have paid for that year from the total mortgage, and then be eligible to pay 10% of what was left?

Then if I was to pay it back, do I just call up my lender and say that's what I want to do?

Thanks!:o

StrawberryJam132

Hey Elsbells21 :wave:

I'm no expert, but I believe it's 10% of the mortgage total at the start of the 'year'. However someone more knowledgeable may debunk this. I've only just started over paying I've just found out some mortgage lenders allow unlimited OP's. Maybe something worth looking into?

You can OP via online banking. Just like paying your credit card.

Hope this helps!

black_taxi_2

instead of overpaying shorten term of mortgage a few years

Elsbells21

Thanks for the responses Strawberry Jam and Black taxi

I'm getting the mortgage on my own so cannot afford a shorter term, but was really wondering in case I came into some money in the future.

I had a look through the options I was provided and none come with unlimited OPs so don't think that is something I can do anyway.

That's good to know Strawberry, as that would potentially mean you can pay off a bit more than the way I worded it.

(By the way, I'm about to follow your MFW thread - very entertaining/enlightening :j)

thanks again!

black_taxi_2

best not to put pressure on yourself Elsbells,10% o/p is always there,as you haven't been offered mortgage---have you looked at HSBC on-line

Elsbells21

black_taxi wrote: »

best not to put pressure on yourself Elsbells,10% o/p is always there,as you haven't been offered mortgage---have you looked at HSBC on-line

Haha, I guess you're right there!

I just want to know exactly where I stand (or don't) :rotfl:

I haven't looked at HSBC online. I'm applying at the moment through Woolwich via my IFA. I think I find out if I have got it next week Friday after the valuation :eek:

StrawberryJam132

Aw thank you Elsbells21 :beer: You'll have to start one once you're moved in! It's addictive

You're the same as me; getting a mortgage on your own. I struggled with over paying in the first year. Bills coming out of my ears (I was a little unprepared). How long is your fixed term? Can always get a mortgage that allows unlimited OP's then?

I've been toying with the idea of shortening my term like black taxi suggested. It's a scary prospect though. I have 11 months to trial run my new budget, so will hopefully have a better idea of what's achievable by then.

Keep us updated with your MF journey Elsbells21, I'm intrigued

StrawberryJam132

Ah never mind, just read your last post. How long are you looking to fix for? (I'm assuming you're going for a fixed rate mortgage?)

Elsbells21

StrawberryJam132 wrote: »

Aw thank you Elsbells21 :beer: You'll have to start one once you're moved in! It's addictive :DYou're the same as me; getting a mortgage on your own. I struggled with over paying in the first year. Bills coming out of my ears (I was a little unprepared). How long is your fixed term? Can always get a mortgage that allows unlimited OP's then?

I've been toying with the idea of shortening my term like black taxi suggested. It's a scary prospect though. I have 11 months to trial run my new budget, so will hopefully have a better idea of what's achievable by then.

Keep us updated with your MF journey Elsbells21, I'm intrigued

I will keep you updated (providing I get it!! :eek:). I'll need someone to help me make a fancy-pants spreadsheet to keep track of everything.

My fixed term will be for 5 years. It's at a 3.85% rate which I thought (in my infinite wisdom) was good. My IFA said I could go for a lower rate for 2 years, but as it's a new build SO not ready until the very ambiguous 'spring', you don't actually get the full 2 years. It's only 2 years from offer... or something like that. Everytime I explain it to myself I get confused!

tootallulah

Good luck I hope you get it, the first year is an eye opener but it gets easier, even overpaying £20 a month makes a significant difference to the end date when you have 30 years to go, 10% paid off every year? Ten years to mortgage free!

Elsbells21

tootallulah wrote: »

Good luck I hope you get it, the first year is an eye opener but it gets easier, even overpaying £20 a month makes a significant difference to the end date when you have 30 years to go, 10% paid off every year? Ten years to mortgage free!

Thanks tootallulah! :j

I can dream right ooh it would be lovely to a) get mortgage b) be mortgage free

I don't know how I throw staircasing into there, but I'll cross that bridge when I come to it :rotfl: