A mortgage overpayments question

Shakin_Steve

If you overpay on your mortgage each month, can you take a break in payments later on?
For example, your contractual payment is £700 per month but you pay £800. After 7 months you will have paid an extra month, after 14 months an extra 2 etc. Now, say 5 years down the line, the worst happens and you find yourself out of a job for a period of time. By this point you would be over 8 months ahead of the game, so could you not pay anything for that period without any comeback from the bank ( as long as you asked them, obviously), or would they expect at least a lower payment?

glasgowdan

Look at your mortgage pack regards payment holidays. Overpayments wouldn't have any impact on them i shouldn't think.

Strummer22

It depends entirely on the terms of your mortgage. Some lenders will allow a payment holiday if you've been overpaying. I doubt they'd allow 8 months in a row though.

You're better asking your lender... or trawling through all the small print.

amateur_house

I had a mortgage that used to show the overpayments as an 'overpayment reserve' on my annual statement. It said this could be drawn down if needed which I suppose is the same as not making a payment as you could use the reserve to make the payment. I think it will depend on how your lender treats your overpayments.

always_sunny

It depends on your lender, mine says no.
My lender allows for my payments to be increased (I can schedule them) or I can just transfer whatever extra to the mortgage account (like any other transfer).

If I overpay, I will still need to pay the minimum monthly payment committed, there's no prepayment.

Shakin_Steve

Ok...to go even further. Could they start repossession proceedings if you stopped paying or payed at a reduced rate, even though you were, technically, up to date?
I'm not in trouble, by the way, neither am I asking 'for a friend'.

glosoli

Your mortgage offer will state whether you can have a payment holiday or not, I believe section 11 or 12.

marliepanda

Shakin_Steve wrote: »

Ok...to go even further. Could they start repossession proceedings if you stopped paying or payed at a reduced rate, even though you were, technically, up to date?
I'm not in trouble, by the way, neither am I asking 'for a friend'.

If you stopped making your required monthly payment, yes.

It'll be covered in your terms and conditions.

Just don't overpay and save it for the rainy day you're talking about, if the terms don't cover you how you'd like

Shakin_Steve

Thanks for all the replies. Just to make it clear, I'm not asking for any other reason than curiosity. If you don't ask, you don't learn.

getmore4less

set up a loss of income fund, 6 months expenses, longer if you think it will take longer to replace income.

AnotherJoe

For the sort of flexibility you are interested in, you'd be best off with an offset mortgage. Most standard mortgages don't cover these situations well, if at all.

Also, looking at the context you outline, , if you need to take a payment holiday of several months, you were overpaying too much and should have been building up an emergency fund first instead. If that was done in the context of an offset, you'd get the benefit of both.

This is aside the entire issue of whether overpaying a good idea for each individual . This website tends to over encourage it without considering other alternatives at all, some of which will provide much better returns.