Overpayments can you keep the monthly payments the same?

Thrugelmir

topcat007 wrote: »

How does paying by standing order rather than direct debit make a difference?

Thanks !

Lenders will automatically amend direct debit to collect the correct amount, i.e. the amount required to pay the outstanding debt over the remaining term of the mortgage. With a standing order you are in control.

Kittycat1981

TSB have a simple form you can fill in and send to them, it asks you how you want make your overpayment-

"i want to start making regular extra payments on my mortgage of _____ in addition to my normal monthly payment"



http://www.tsb.co.uk/mortgages/extra-payment-request-form.pdf

anna42hmr

Hi, I overpay with TSB, the monthly overpayment is increased via direct debit in my case and when i over pay lump sums (I have done it over the phone) they ask if they want you to leave payments the same, so I do.

They have advised though at the end of the fix they can (and usually do) recalculate the payments so that the monthly repayments reflect the actual term of the loan, however the simple way of counteracting that is to adjust the overpayments accordingly. So for example they re-calc means they drop the payments required by £100 just increase the overpayments by that same amount and therefore the same affect as them not recalculating.

They have also advised me on the phone that any lump sum payments over £1k if they do not have instructions for it, this can trigger a calculation at the time (so for payments over this amount they recommend you call rather than send the payment online - which when i did it was very simple and quick to do and accepted lump sum via debit card payment).

There is quite a good explanation on TSB's website which explains some of it as well as the form that was mentioned by a previous poster

http://www.tsb.co.uk/mortgages/existing-customers/making-extra-payments/

Mrs_Soup

With mine if I overpay up to £500 it just sits there as an overpayment reserve, they don't recalculate the monthly payment or reduce the term. However if I go over £500 overpayment in a month (even on my BMR mortgage which allows unlimited overpayments) they then start fiddling with it and I have to phone and get them to leave it alone.

Jhoney_2

Thrugelmir wrote: »

Lenders will automatically amend direct debit to collect the correct amount, i.e. the amount required to pay the outstanding debt over the remaining term of the mortgage. With a standing order you are in control.

I was thinking of doing it this way. So when my new deal starts, they take the lower DD contractual amount and I send them a monthly SO for the OP amount that I want.

It seems the simplest way of doing what I want without the lender meddling in it unnecessarily or me having to tinker with the amount constantly.:)

topcat007

anna42hmr wrote: »

Hi, I overpay with TSB, the monthly overpayment is increased via direct debit in my case and when i over pay lump sums (I have done it over the phone) they ask if they want you to leave payments the same, so I do.

They have advised though at the end of the fix they can (and usually do) recalculate the payments so that the monthly repayments reflect the actual term of the loan, however the simple way of counteracting that is to adjust the overpayments accordingly. So for example they re-calc means they drop the payments required by £100 just increase the overpayments by that same amount and therefore the same affect as them not recalculating.

They have also advised me on the phone that any lump sum payments over £1k if they do not have instructions for it, this can trigger a calculation at the time (so for payments over this amount they recommend you call rather than send the payment online - which when i did it was very simple and quick to do and accepted lump sum via debit card payment).

There is quite a good explanation on TSB's website which explains some of it as well as the form that was mentioned by a previous poster

http://www.tsb.co.uk/mortgages/existing-customers/making-extra-payments/

Hi

Thank you for this very useful information:beer:

To make sure i have understood correct you have a DD which overpays by the same amount every month buy your normal payment stays the same?

Which would fall in line with this i guess:

"
Regular overpayments

Where interest is calculated on a daily basis, your balance is reduced following every payment so the interest you're charged will go down. However we won't recalculate the monthly payment each time, we'll wait until the next time there's some other reason for recalculating your monthly payment, such as a rate change. If you're not sure whether your mortgage is on daily interest, please contact us."


and then you can overpay under £1k in a lump sum without triggering calculation again which comes under this:


"Keep paying your current monthly payment so that you repay your mortgage sooner. However, when we next re-calculate your monthly payment, for example at an interest rate change, we will set the new monthly payment to a level that will repay your mortgage over the current mortgage term."


Thanks for your help i really appreciate it

topcat007

Big thanks to everyone else as well great community of very helpful people on here !

anna42hmr

topcat007 wrote: »

Hi

Thank you for this very useful information:beer:

To make sure i have understood correct you have a DD which overpays by the same amount every month buy your normal payment stays the same?

Which would fall in line with this i guess:

"
Regular overpayments

Where interest is calculated on a daily basis, your balance is reduced following every payment so the interest you're charged will go down. However we won't recalculate the monthly payment each time, we'll wait until the next time there's some other reason for recalculating your monthly payment, such as a rate change. If you're not sure whether your mortgage is on daily interest, please contact us."


and then you can overpay under £1k in a lump sum without triggering calculation again which comes under this:


"Keep paying your current monthly payment so that you repay your mortgage sooner. However, when we next re-calculate your monthly payment, for example at an interest rate change, we will set the new monthly payment to a level that will repay your mortgage over the current mortgage term."


Thanks for your help i really appreciate it

Yeah that's right, my contractual monthly payment (during the fix term) is £433.48, however as I overpay by £250 per month TSB collect £683.48 every month via the direct debit (and they make no adjustments to the monthly payment).

When I overpay lump sums I do this over the phone and they ask at the time if want an amendment of payments after or to leave as it is and i ask them to leave as it is.

However they explain that at certain points will recalculate automatically (I.e if move to another fix period, if when On variable rate the interest changes, if over pay by more than 1k without instruction of what to do with it - I.e. If I sent payment using online banking and didn't call to say how want it allocated etc)

You can over pay up to 10% of the mortgage balance a year (as at 1 Jan balance or date of mortgage opening if in first year) and the year with them is a callendar year (as I understand some banks do it on an anniversary basis)

Makkusu

If your repayments are recalculated monthly you can make up for this by increasing the overpayment each month as others have said.

I've been forecasting using a spreadsheet (see below), as you'll see the 'actual payment' remains the same each month.

I believe this provides more flexibility for unforeseen circumstances but I can understand the hassle of making odd payments each month.



P.S. I am talking purely in theory.

Paulpen

Thats a great spreadsheet - wouldnt mind knocking one of them up when we get ours (valuation on monday !)