mortgage payment dates, overpayments and fired rate

dwynwen

Hello!

A few queries I hope someone can help me with.

1) I took a five year fixed mortgage on 1 April 2015 with payments at £371. Mortgage is set to end on Sep 2021. Since Sep 2015 to November 2016, I actually used my overpayment reserve. From December, I returned to making normal payments. Dec 2016 and Jan 2017 were taken as £371 but from this month - Feb 2017 - payments have gone up to £468.80. Does anyone know why this would happen as I've fixed for five years - so to April 2020 I understood. My mortgage co says it's because I used the overpayment reserve but I don't see why this would increase the payment.

2) Does payment date matter, and will this have caused the increase to the new amount of £468? On 1st of every month, my overpayment reserve is debited for my monthly payment and then credited back up once the payment hits the mortgage account. Is this normal? Would it be better just to arrange to pay on the first of every month instead of on the 10th of each month?

3) Should payments be instant? My current account and mortgage are with the same lender. For example, my current account was debited for £468.80 on 10 Feb but this amount has still not been credited to my mortgage or back to the overpayment reserve. I pay daily interest. I wonder if this delay in crediting my mortgage balance is also what might have led to the higher payment of £468.80?

I'm not having much luck with mortgage company and am awaiting an explanation and breakdown for the new amount. Could anyone help in the meantime, please?

dwynwen

Also, does anyone know why the overpayment reserve is debited each month, too? If I didn't have an overpayment reserve, they would not be able to make this debit so I'm a bit confused.

dimbo61

You talk about mortgage reserve ?
Have you are any time taken a mortgage holiday ? Not paid the mortgage at any time since you took it out ?

dwynwen

Yes, I did that for one year and two months from Sep 15 - Nov 16. My overpayment reserve (overpayments) is about £8,000 at this time.

getmore4less

which lender?
That may help find those with specific knowledge of the same lender.

more details of the mortgage like, amount, rates on the mortgage and reserve and anything else relevant.

getmore4less

I suspect the overpayment reserve is not real money.

When you use the reserve you are borrowing more so will need to pay more interest and pay the money back.

need real numbers to confirm that.

nicholbb

As interest is calculated daily then 1st of the month is best because you are removing 10 days of interest. To be honest it's probably negligible so pay the day you will have money.

Same day transfer. Depends on bank and time you made the transfer. It may have done but records are not yet updated, bank IT systems are awful.

I was little confused by overpayment (normally used to say paid more) but seems you owe 8k extra. The 5 year fixed means the interest rate is fixed for 5 years, not your monthly payment. When you didn't pay your mortgage, the amount you owed increased but the time to pay it back didn't. So to ensure it's paid back in time they increased your payments.

dwynwen

Hello, and thank you for the replies.

Both my mortgage and current account are with Nationwide so I don't understand the delay for the payment. It leaves my current account on the 10th every month but it does not credit my mortgage account on the same date. Anyone else come across this? Looks like it's taking three days to credit my mortgage account.

I understand that payments might have to increase for the time I was taking the payment holiday (by drawing down on the overpayment reserve instead) but I don't understand why by so much. I took the payment holiday for about a year - 13 months. Now that I have resumed making normal payments they have gone from £371 to £468 - almost £100 extra per month. Will I have to pay this extra £100 right to the end of my fixed term in April 2020? That's a lot extra each month for many months! 39 months in fact. About an extra £3,900 because I took the payment holiday (overpayment reserve) for about 13 months. I don't understand how the new monthly payment amount of £468 has been reached.

My outstanding mortgage balance is £24,269. Rate is 2.44. My overpayment balance is £8,393. This is not what I owe. This is what I have previously overpaid. (Some months I paid a lot more than my regular payments.) Before I started using the overpayment reserve - which I did for just over a year - it was at £13,500. (My original mortgage was for £50,000 which I took in May 2012 but I've paid it off quicker with my extra / overpayments.)

And I still don't understand why they debit the overpayment reserve for the mortgage amount on the 1st each month and then credit it back in when the actual payment is received from the current account. If I didn't have an overpayment reserve, they wouldn't be able to do this.

Hope that's a bit clearer.