Confused!!

Microhead

Hi everyone

I am currently on a 5 yr fixed deal with Coventry. Now about 6 months in. Term is 26 yrs.

I am looking to start overpaying month by month soon.

I don't want my monthly payments reduced so I guess the term will be reduced gradually instead?

My question is when I go to remortgage after the fixed term has ended, will the fixed rate deals on offer have higher monthly payments because the term has been reduced due to me overpaying? Or am I way off?

Apologies I am a bit confused on this at the moment!!

Thrugelmir

A little reading for you.

Can I pay extra towards my mortgage?
If you are considering making extra payment(s) on your mortgage please contact us first to discuss your options.

Working out if your extra payment will be a capital repayment or an overpayment.
The extra amount you choose to pay will determine whether your extra payment is treated as a capital repayment or an overpayment.

If the equivalent of three times your normal monthly payment is £1,000 or more then:

Any extra payment of at least three times your monthly payment will be treated as a capital repayment.
Any extra payment less than three times your monthly payment will be treated as an overpayment.
If the equivalent of three times your normal monthly payment is less than £1,000 then:

Any extra payment of £1,000 or more will be treated as a capital repayment.
Any extra payment less than £1,000 will be treated as an overpayment.
Please note, if you have an interest-only flexible drawdown mortgage, any additional payment(s) over £500 will automatically be treated as a capital repayment.

How do overpayments work?
If your mortgage is on our daily interest scheme we will credit your overpayment to your mortgage account immediately, which means you will be charged less interest overall. However, we will not treat this as a capital repayment unless you specifically ask us to and the terms and conditions of your mortgage allow it. Therefore, your payments will not automatically be recalculated.
If your mortgage is on our annual or half-yearly interest scheme, your mortgage balance will be reduced immediately when we receive your overpayment. However, we will not automatically recalculate the interest charged until the following 1 January, or for half-yearly interest scheme accounts either 1 January or 1 July, whichever applies to you.

If your mortgage is split into 'sub-accounts' and you do not tell us which sub-account(s) you would like us to apply your overpayment to, we will credit the payment between sub-accounts as we reasonably consider appropriate, subject to any regulatory requirements.

If you would like more information about how we have processed your payment please call us.

Please remember that additional payments are subject to your existing mortgage terms and conditions which may include early repayment charges. If your mortgage account is in arrears, additional payments may be processed differently from the ways described above.