Mortgage issues, can someone explain what this letter means?

Farside

I have received this letter from Barclays, i don't understand it.

1. How come my overpayments make my monthly payments go up?? That doesn't make sense, i'm making overpayments to make my term go down, why am i being charged more to make overpayments? I'm supposed to be allowed 5% overpayments without being charged.

2. They say they will never reduce the term unless someone asks for it to be reduced? !!!!!!? so i've been paying overpayments for nothing? the term has not been reduced because i didn't ask them to reduce it? What do they think i want? to give them a huge bonus with all my overpayments for 25 years .. lol

3. What do they mean i "redeem my mortgage by maturity"?

I find it hard to understand these letters sometime, can someone explain how this works, in layman terms lol

ViolaLass

That is the most bizarre letter. "Mortgage balance + overpayment balance"?

I'm afraid I can't help but you should contact them and ask whether they really meant what they wrote.

Farside

They wouldn't have written it if they didn't mean it lol, just trying to decifer it is the hard part, they are ignoring my secure messages online

Farside

Can anyone explain it a bit better? Thanks

ndf9876

Redeeming the mortgage by maturity means, repaying it at the end of its natural term - as opposed to, for example, remortgage, or early repayment with a large cash sum (inheritance, lottery win, that kind of thing).

What they are, I think, trying to tell you, is that your overpayments have gone into a "pot" to reduce the total amount repayable of your mortgage. But the thing that's stated next is that they don't use it to reduce your monthly repayments - these are calculated on the original amount of the mortgage. Instead, they use it simply to reduce the life (term) of the mortgage. So as an example, your 25-year mortgage may now be a 24-year mortgage.

Right now, the life of your mortgage will be shorter but the amount you repay is a bit more. You can ask them to change this so the life of your mortgage remains the same (using the example above, 25 years) but the monthly payments come down.

I hope this makes sense - I am no expert, but that is my interpretation of the letter.

EDIT - Just to clarify the bit about reducing the term - the bit that starts "We will never reduce the actual term..." is because it's a fixed agreement. An agreement that you will now pay off earlier. They would have to formally modify that agreement to "formally" bring the term down. Then it talks about maturity - that means, as I said earlier, paying the mortgage off by natural means.

Others may disagree, but as I said, that would be my understanding of the document.

Farside

Yes that makes more sense, thanks :beer:

chrislee2810

It sounds as if your overpayments sit in a separate account until you decide whether you want to reduce the monthly term or payment by informing them.