Woolwich overpayment vs part redemption

browsingid

Hi all. Got a technical question regarding the difference between overpayments and part redemptions on my Woolwich mortgage.

Woolwich tell me that overpayments that exceed 3x my normal monthly amount will be treated as part redemptions and my monthly repayment will be recalculated as a result.

I just made a big enough payment to be a part redemption and therefore expect my monthly payments to be recalculated. However I previously made a smaller (less than 3x) overpayment. Will that smaller overpayment be taken into account when they recalculate my monthly payment?

Any ideas?

Thrugelmir

Quite possibly. As the calculation will be based on the amount you owe now, and therefore the amount that is required to repay your mortgage over the remaining term. The "system" will produce the figure not a human being.

getmore4less

you should have the option to not have the payment recalculated.

browsingid

Thrugelmir wrote: »

Quite possibly. As the calculation will be based on the amount you owe now, and therefore the amount that is required to repay your mortgage over the remaining term. The "system" will produce the figure not a human being.

Thanks. This is my hope - that the recalculation will be a case of the computer just taking what my outstanding loan is - less all repayments and part redemptions to date, and then recalculating the new monthly payment off the back of it. The FAQs are not that helpful.

I don't mind my monthly repayment reducing as I am also making relatively small monthly overpayments that I will just increase to make up the difference.

demon99

I work for Woolwich. Any overpayment equal to or more than 3 x CMP is applied as a part redemption and forces the CMP to be recalculated and a Revised Payment Notice (RPN) to be generated. This will result in lower monthly payments.

Any overpayment less than 3 x CMP is applied as a prepayment and reduces the amount interest is paid on but not the amount CMP is calculated on. This will result in the Mortgage being paid off sooner as more of the capital is being repaid in the CMP.

browsingid wrote: »

Thanks. This is my hope - that the recalculation will be a case of the computer just taking what my outstanding loan is - less all repayments and part redemptions to date, and then recalculating the new monthly payment off the back of it. The FAQs are not that helpful.

I don't mind my monthly repayment reducing as I am also making relatively small monthly overpayments that I will just increase to make up the difference.

browsingid

OK that is interesting.

How quickly will the RPN notice be generated? My next instalment is next Tuesday, and I made 2x part redemptions and one 'prepayment' in the last two days.

Can I ask Woolwich to apply the 'prepayment' balance as a part redemption if I get in touch with them - would they do this?

AnotherJoe

I dont think its worth the effort to tell them if you are regularly overpaying, it all comes to the same thing in the end as long as you occasionally bump up your overpayments to account for the diminished calculated interest payment.
I get a monthly letter telling me the interest has been recalculated because I have a standing order to overpay as well as the mortgage DD.

getmore4less

I think you can ask for a recalc at any time. not worth bothering if overpaying but if you need the payment to drop to account for the overpayments give them a call.

dano17439

demon99 wrote: »

I work for Woolwich. Any overpayment equal to or more than 3 x CMP is applied as a part redemption and forces the CMP to be recalculated and a Revised Payment Notice (RPN) to be generated. This will result in lower monthly payments.

Any overpayment less than 3 x CMP is applied as a prepayment and reduces the amount interest is paid on but not the amount CMP is calculated on. This will result in the Mortgage being paid off sooner as more of the capital is being repaid in the CMP.

Is this the case with the ING Mortgages that were transferred over which had no maximum overpayment limits? Sure the T's & C's would be the same as the old mortgage?

demon99

Yes all Mortgages are serviced using the same system. A part from the overpayment allowance there is no difference in the way overpayments are calculated.

Also yes you can ask for the prepayment balance to be "capitalised" at any time and this will reduce your CMP depending on the capitalised amount. This is the best option if you want the lowest possible monthly payments, however your term will remain the same. As for the RPN it is auto generated and usually sent out the same or next working day.

dano17439 wrote: »

Is this the case with the ING Mortgages that were transferred over which had no maximum overpayment limits? Sure the T's & C's would be the same as the old mortgage?

getmore4less

There are issues with the way the calculations are done with offset mortgages.

I have had to have mine reset after the automatic annual adjustment messed it up.

Check your DD.