Coventry building society - Mortgage overpayment

xyz123

Hi
Looking for some advise from anyone with experience of Coventry building society or brokers dealing with them. I don't have a mortgage with them but am looking to get one with them as a remortgage.


I am trying to understand how does the overpayment work. From their website:


"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. This means that your payments will not automatically be recalculated."


What does this mean?


1. As I understand it is always better in long term to reduce capital repayment rather than on the total.


2. From above It looks like (of course If I get the mortgage) and then want to make an overpayment I have an option of asking them to treat that as capital repayment. In that case what happens? do they keep the mortgage payment same and reduce the term or do they reduce the mortgage monthly payment. this is not re the annual limits of overpayment but just clarifying on what will happen to whatever overpayments?


thanks for your help

silvercar

They give you the choice. So one option is to ask them to recalculate your remaining payments based on the new lower amount owed. The other option is for the amount to reduce the interest owed.

I have found their phone staff very knowledgeable and helpful.

xyz123

silvercar wrote: »

They give you the choice. So one option is to ask them to recalculate your remaining payments based on the new lower amount owed. The other option is for the amount to reduce the interest owed.

I have found their phone staff very knowledgeable and helpful.

Thank you. I am bit confused. So is there an option to keep mortgage payment the same. I am not sure if the second option you mentioned is this?

Is any one option better than other in terms of long term savings in interest? T

silvercar

They have a booklet explaining.

The relevant para on page 6:
Overpayments: All our mortgages allow you to make overpayments,
however restrictions may apply. Overpaying reduces the amount of interest you pay overall. You can either choose to reduce your mortgage term, which means you will pay off your mortgage sooner, or you could reduce your monthly payments, simply contact us to let us know. You can check your mortgage illustration to see how much you are allowed to overpay each year.
However, once you have made an overpayment there is no guarantee that you can ‘borrow back’ the amount you have overpaid, should you need to.

So either you keep the payments the same (and the mortgage ends sooner) or you have the monthly payments reduced.