Over Payment on Mortgage

Dopey2011

Hi. We have a fixed rate mortgage for 5 years with 3 years left to go, however there is the option to pay 10% over payment each year. I want to make an over payment but the bank wants to reduce my monthly payment where as I want to reduce the term because I understand that this will save me more money. I phoned and spoke to the mortgage company about this and they said if I want to reduce the term with the over payment I would have to pay for a re-assessment after I had made the over payment, but the couldn't guarantee I would pass. Why would I need to go through an assessment to make the over payment as I don't want to reduce my monthly payment either.
Can anyone confirm that I would save more by reducing my term rather than the monthly payment?

If I did pay and get re-assessed to reduce the term and then failed the assessment could the request the mortgage be repaid in full?

chelseablue

Who is your mortgage provider?

CPS

My Mortgage Company also reduce the monthly payment every time I make an overpayment. So if my monthly payment reduces from £800 to £797 as a result of my £500 overpayment, then the following month I up my overpayment to £503. I have been doing this for about a year now and my monthly payments have reduced from £820 per month to £790. My overpayments started at £500 and are now £530. It means the amount of capital I want to overpay stays the same, and months I cant overpay I pay less on my mortgage. I will reduce the term when I remortgage.

xyz123

This is quite common and comes up million times here (including from me!) . As long as you adjust your overpayments and then read centre the term when remortgaging at end of fixed deal it makes no difference over the life of Mortgage.

Thrugelmir

Dopey2011 wrote: »

If I did pay and get re-assessed to reduce the term and then failed the assessment could the request the mortgage be repaid in full?

No there wouldn't be such a request.

Affordability has to be reassessed in line with current regulatory requirements. In essence lenders are protecting themselves against potentially unfavourable claims. In that people will blame the lender should they become financially distressed. This has to be put into context of the poor lending criteria that some lenders operated a few years back. Much of which is still very much in existance.

getmore4less

Makes a small difference over the year and fixed period.

some lenders have an issue with max overpayment and not reducing payments as this takes you over the overpayment limit.

Boredatwrork

Go the lenders way and everytime they reduce the monthly payment, over pay the usual amount and make up the difference of the banks reduction reduction. Problem solved.

Obviously don't go over the 10% however.