Mortgage overpayments

llh88

Hi Everyone,
This is my first thread and I'm looking for some thoughts...
I have a mortgage for which I am allowed to make overpayments of 10% of the previous years balance without a fee. I have made 2 overpayments, in 2 separate years, each for the max of 10% of previous years balance. Each time, the bank lowered my monthly mortgage payments, despite me not agreeing to this (it say's in the T+C's that they wont reduce it without my permission), and in fact the 2nd time, I specifically asked via letter when making 2nd overpayment that the rates were not reduced. Each time, the bank lowered the payments and I had to request for the payments to be put back to what they were before.
I am now being charged ERC each month (I have 1yr left of the fixed term). I have complained to the ombudsman who feel the bank have been fair, and advised they cannot do anything and I can consider court at my own expense.
Question - Should I be charged ERC when I have overpaid the allowable (before charges) 10% in 2 separate years and keep the same monthly payments?
Any advice?
Thanks to all in advance

edinburgher

Should you? From the sounds of it, probably not.

Will you make back the money you've lost at court? I very much doubt it.

To be honest, you would have noticed the lower monthly payment pretty much instantly, so why didn't you address it for over a year? I would have addressed this well in advance of making a 2nd OP!

A_Frayed_Knot

Have you asked them why they are charging you an ERC? Ask them to go over the figures with yo and explain.

They base the 10% on the figure owed on 31.12.?? (well, mine does, anyway). I was on VR then took out new deal in October, which meant I could o/p 10% from Oct to Dec 31st, then o/p 10% total of balance from 1.1.?? for the next 12 months.

Would probably need dates and figures, to see if they are being fair or not, or what has gone wrong in calculations.

llh88

Thanks both for your replies!


I made the 1st o/p Dec 2015 and the 2nd o/p Jan 2016... my o/p year runs Jan-Dec so this was considered ok. They first time my payments dropped the bank changed them back and did not mention the ERC I would incur for doing so, the 2nd time, it was the bank that sent the letter to HQ with my cheque to say I didn't want payments to reduce, and they still did.
The payments first reduced in Feb 2016 and it is since then that I have been disputing this with the bank/ ombudsman.


Any additional thoughts? Agree court costs may leave me out of pocket... but I feel helpless as an individual to resolve this...

edinburgher

In the short term, would the best thing to do not be to reduce your payments to the new monthly level that they have advised and then take your business elsewhere in a year?

As mentioned previously, court would probably be a stressful waste of time and without meaning to be defeatist, the immediate problem could be mitigated in a year by moving.

If you don't mind me asking, how much out of pocket do you find yourself as a result?

Also, probably no harm in naming and shaming the bank if you're just presenting the facts....

llh88

Yes... the bank is The Co-Operative... I did not take my mortgage out with them, but with Britannia, but it moved over when they merged.


I don't want to reduce my mortgage payments in the near team as I lose out over the course of the year by not paying my mortgage off as quickly and I also then pay a little more interest as on a higher loan amount.


I am most definitely considering remortgaging elsewhere, even before my fixed period is up (I have 1% ERC over the next year if I leave, and so am thinking I could make that back from a better interest rate).

I am just so surprised as I thought the ombudsman would've helped more.


Thanks all

A_Frayed_Knot

Was your o/p for Dec 15 taken off in Dec 15 and was it within your limit of o/p without penalty? and the same for your Jan 16 o/p?

If that was the case, then as I understand it, they charged you an ERC for changing your payments back to original amount. If so, then could you not have paid the lesser amount and made up to original amount with o/p's, providing it was within limits.

As o/p limits are determined by your mortgage balance at the start of the year, unless you exceeded this figure, I would not expect an ERC, unless the bank are taking your instructions to keep mortgage payments the same, they have taken the view you are reducing your term of fixed period, and as such an ERC is payable.

Have they changed your fixed term?

llh88

To your first questions... yes to all.
Agree with your 2nd statement... but in my T+C's it say's the bank would not reduce my monthly payments without my consent, therefore I wasn't expecting them to change it in the first place, then increase it and charge me ERC.
Agree with the 3rd paragraph too...
They have not changed my fixed term, do you think that is what I may need to do to resolve this? I didn't know if I would have to pay for that. I may give The Co-Op a ring and check.


Unfortunately I think this time I may need to accept the banks offer of a measly £40 and cut my losses... even though I don't agree with it on principal

Thank you for your comments, appreciate the time taken to help me!

getmore4less

Check your T&C very carefully.

IF you overpay and the normal payment would reduce then you increase it back to where it was then you are overpaying more if that excedes the OP limits ERC are due.

The key will be do the T&C allow for that scenario

llh88

Hi getmore4less,
I agree with you and I think this is what has happened. However as the T+C's state that the bank will not lower my mortgage payments unless it gets my permission, I believed that the 10% O/P allowance was on top of my regular monthly mortgage payments. This is what my T+C's say:


'O/P of up to £499 will be applied to your mortgage acc on the day of receipt. This will reduce your balance and we will recalc your interest in line with you acc terms and conditions, your monthly repayments will remain the same. However, if you o/p by more than £500 then you will also have the option to have your monthly repayment recalculated. Please advise us if you would like your monthly repayment to be re-calc.'

There is also a 'key facts about your mortgage' doc I have and this say's you can make O/P up to 10% of previous yr end balance without incurring ERC's... but that doesn't mention what happens to your monthly mtg payments at all.


I have explained this to The Co-Op and to the ombudsman and have basically been told they do not uphold my complaint and I am to go through the courts... to my expense and time and as the ombudsman said they cant do anything, I have a feeling the court may side with them too.


Just feel helpless to pursue anymore but I still stand by the fact that I don't think I am in the wrong