repayment of capital on an interest only mortgage

kisskin

We have an interest only mortgage and was wondering if we pay more than the monthly interest payment, can we insist that the mortgage company deduct that extra amount from the capital and not use it for the following months interest payment ie reducing the interest payable each month and therefore reducing the capital owed each month?

kingstreet

Only the lender can answer that.

No reason why not, it's normal.

Jimbo1976

If you have an interest only mortgage its highly likely that your lender will take out your monthly interest payment by direct debit. So you can't manually increase this payment (unless you pay by standing order)

If you make additional payments ie lump sum reductions these will be deducted from your outstanding mortgage balance, so your debt will go down. This will mean that your following month's interest payment will be slightly lower (as you owe less).

Eg if you owe £100,000 at 3% your monthly interest payment is £250. If you paid off an extra £500 through a lump sum reduction, then the lender won't cancel your next 2 months interest payments. It will reduce your balance by £500 down to £99,500 and you will pay £248.75 per month.