Can I get a refund for overpayments made to my mortgage?

VicksterG

I have made a total of £1700 in overpayments in the past 4 months to reduce my mortgage term and reduce interest. I set up a standing order to make regular monthly payments to do this.
When speaking to my mortgage company for the third time, I was only then told that I couldn't do this. They informed me the mortgage term would remain the same and the monthly payments would be reduced. This seems somewhat pointless and I would be better off putting my money away into a savings account. It's only been reduced by about £6 - £7 a month!
I asked for a refund and they told me this would have to be approved by a manager. They told me I would find out within the next 48 hours whether the refund would be approved or refused.
Not once did they inform me in the two previous conversations that I couldn't reduce my mortgage term by making overpayments despite me making it clear what I wished to do.
Do they have the right to refuse a refund? Please help!

Tom99

[FONT=Tahoma, sans-serif]When overpaying you can normally request that the monthly payments are not reduced.

[/FONT] [FONT=Tahoma, sans-serif]This is effectively the same thing as reducing the term but the reduced term is not explicitly documented.[/FONT]

Edi81

Sounds like a case of cutting off your nose to spite your face.

If the lender agrees to reduce the term this becomes contractual and you need to go through affordability checks.

continue to overpay, the impact of compounding will start to have an efffect on reducing the term. Put the numbers through a mortgage overpayment calculator to see the impact.

getmore4less

forget the terms just work on the payment that is what really determines how long the mortgage lasts

they reduce your contractual payment you up your standing order same effect/cost/benefit.

AnotherJoe

VicksterG wrote: »

I have made a total of £1700 in overpayments in the past 4 months to reduce my mortgage term and reduce interest. I set up a standing order to make regular monthly payments to do this.
When speaking to my mortgage company for the third time, I was only then told that I couldn't do this. They informed me the mortgage term would remain the same and the monthly payments would be reduced. This seems somewhat pointless and I would be better off putting my money away into a savings account. It's only been reduced by about £6 - £7 a month!
I asked for a refund and they told me this would have to be approved by a manager. They told me I would find out within the next 48 hours whether the refund would be approved or refused.
Not once did they inform me in the two previous conversations that I couldn't reduce my mortgage term by making overpayments despite me making it clear what I wished to do.
Do they have the right to refuse a refund? Please help!

That is only the contractual term, not the actual term,which will be reduced.

Look at it this way, suppose your mortgage was £100k and you were normally paying £1k a month and you made an overpayment of £97k. Your practical mortgage term would reduce as long as you continued with your normal payments of £1k a month, to 3 months, whatever contractually was stated.

So, carry on overpaying if that's what you want (but don't do it to the detriment of pension,its a common mistake to overpay even though financially pension is substantially better especially for higher rate taxpayers)

p.s to keep the overpayments up and reduce the term, you will need to compensate for that £6 or £7 a month by adding it to your overpayment. Instead of paying say £400 overpayment in a month, it would need to be £407 say.

And depending upon your interest rate, it might of course be worth saving into a high rate account instead of overpaying anyway, but thats a function of interest rates not the fact they wont reduce the contractual length.