Is This Santander Mortgage Advice a Runaround?

jonwest

Any advice much appreciated on this: I have just had a discussion with Santander with regards to overpaying my mortgage by £200 a month, as per mse advice, ie, a casual overpayment to reduce the term of the loan rather than a binding agreement. They told me that unless I repay at least the monthly capital element of £419 the term would not be reduced at all, therefore, rather than sending an extra £200 per month, I should save a minimum of £419 before paying into the mortgage account. I would have thought any overpayments made would come off the loan balance, no matter how small the payment? None of Mse's articles mention this so I'm a little confused! Is this correct advice from Santander?

Cardew

It is either the wrong advice from Santander or you have misunderstood what they stated.


If you borrow £100k at x% even paying £1 a year extra will reduce the term - albeit not by much!

amnblog

Sounds like crossed wires - get back to them, you might get someone with some listening skills next time.

jonwest

Thank you, I'll get back to them. It seems like they are dissuading people from paying their mortgages off early. Very underhand if that's the case.

Mrs_Rachel_Trelfa

As others have suggested I think you may have either been told incorrect information or you have misunderstood. I'm with Santander and overpay monthly. I just pop in my branch and ask can I make a capital overpayments please of £Xx and then when they ask me do I want to reduce the term or the monthly repayments... You guess my answer. Only suggestion is not to do it within a few days of the monthly payment going out as it can affect the direct debit which has happened once. You then get the paperwork confirming the receipt of the overpayment and informing you that you can make overpayments online or over the phone (i like human contact and it gets me out the house) you also get a second letter confirming what next few months of repayments are going to be as it may change by up to a pound due to ensuring that your mortgage is cleared over the new term and what your new term is. Hope this helps.

jonwest

Spoke to them again today and what they are saying is that the minimum they can reduce the term is 1 month, so until I have sent overpayments totalling at least £419 my mortgage term will not show as being reduced. It's just the way they tell you it sounds like you are at a disadvantage by not overpaying by the full monthly capital element, when in fact you are not because every penny comes off the balance (no matter what the increments) and therefore, of course, the term is reduced.

Daerve

That makes more sense, we're having a mortgage with Santander and can overpay up to 10% a year with no penalties.

Yorkie1

Are you sure you actually want them to reduce the term rather than repayments?

If they reduce the term, and you later on want flexibility to pay lower amounts for any reason, you won't be able to. If you reduce monthly payments, then the term remains the same. You can continue to overpay, but the amount owed is less over the original (i.e. unreduced) term, so your monthly contractual payments are less.

Mrs_Rachel_Trelfa

jonwest wrote: »

Spoke to them again today and what they are saying is that the minimum they can reduce the term is 1 month, so until I have sent overpayments totalling at least £419 my mortgage term will not show as being reduced. It's just the way they tell you it sounds like you are at a disadvantage by not overpaying by the full monthly capital element, when in fact you are not because every penny comes off the balance (no matter what the increments) and therefore, of course, the term is reduced.

I'm sorry but I'm not following what you're saying. My mortgage repayments are approximately £550 per month yet we overpay most months by £450. I can understand them not being able to reduce by half a month.