Monthly payment figures

Ibsen3

Hello,


I'm hoping someone can enlighten me about whether my monthly payment should have been reduced or not following an overpayment.


The context is that each year, I aim to overpay as much as I possibly can (which is about 10%). When this happened in the first year of our mortgage, our monthly payment was reduced. Each subsequent year, there was no reduction in the monthly payment. Although the interest paid appears to be going down, it nevertheless tends to fluctuate and there really isn't that much difference between the interest in our first year than in our current year, having reduced the total figure to at least two thirds of the original debt.


The interest rate is 3% and, if it helps, our mortgage is with the Halifax.


I'm not sure whether there might be some part of the mortgage agreement that would refer to this but it does appear anomalous to me and I wondered if there was any point in chasing it up.


Any thoughts? Thanks for any help or advice.

AnotherJoe

There are generally speaking two options when it comes down to overpayments.
One reduces subsequent payments to keep the term the same, the other retains payments at original levels so the mortgage will end sooner.
You seem to be on the latter option.
FWIW putting that money into a pension instead of overpaying is likely to be your best option, especially with low mortgage rates and relatively high inflation.

TrickyDicky101

Ibsen3 wrote: »

Although the interest paid appears to be going down, it nevertheless tends to fluctuate and there really isn't that much difference between the interest in our first year than in our current year, having reduced the total figure to at least two thirds of the original debt.


The interest rate is 3% and, if it helps, our mortgage is with the Halifax.

How many years apart do you mean? If the interest rate has always been 3% and you are talking interest charged for the entire year (and any repayments you have made have all been made at the start of each year) then yes you would expect an approximate proportionate reduction in interest charged for that year.

You may not see a reduction in payment amount each month for the reason that AnotherJoe has explained.