GUTTED! Overpayment to Bank of Ireland???

tootallulah

I had this with my first mortgage it was infuriating but I just carried on and all was paid off in 11 years. Subsequently I have always had an offset mortgage which suits me.

getmore4less

Usual fuss over a small difference by those that don't understand how mortgages work

With mortgages what you pay is what determines the cost all the term does is set the minimum contractual payment.

Based on the terms mentioned set up a standing order for your overpayments near the end of the month and adjust as funds are available.

Keep the term as long as you can.

VDOT47

OP - from my experience (with Santander now and Nationwide in the dim and distant past) it is quite normal to ask the lender to use overpayments to reduce the term rather than the monthly repayment and for them to comply.


So I can see your frustration here. But each lender has its own terms & conditions I suppose.

Unicorn_cottage

getmore4less wrote: »

Usual fuss over a small difference by those that don't understand how mortgages work

With mortgages what you pay is what determines the cost all the term does is set the minimum contractual payment.

Based on the terms mentioned set up a standing order for your overpayments near the end of the month and adjust as funds are available.

Keep the term as long as you can.

My knowledge is based on what Martin Lewis advises?

"4 – Ensure you ask for the repayments to shorten the term
Don’t let them just lower your future mortgage repayments, this effectively spreads the debt and means you don’t get as much benefit. When you overpay, ask it to keep your repayments fixed, which will effectively shorten the term of your mortgage, even if you’re making regular rather than lump sum payments.
However, please don’t read that as me saying “ask to shorten your term”. While cutting your mortgage term from 25 year to 20 years has the same effect as overpaying, you’re locked into it so can’t change back. By simply overpaying and letting that reduce the term gradually, you have flexibility to stop overpaying in future"

getmore4less

VDOT47 wrote: »

OP - from my experience (with Santander now and Nationwide in the dim and distant past) it is quite normal to ask the lender to use overpayments to reduce the term rather than the monthly repayment and for them to comply.


So I can see your frustration here. But each lender has its own terms & conditions I suppose.

They don't really reduce the contractual term they just keep the payment the same which can reduce the actual term.

VDOT47

What they technically do is state that if I continue to make the monthly payments (as the same rate as at the start of the term) then it will be repaid in x years rather than the full 25 years.


So you are correct that the contractual term is not reduced (to allow for flexibility to apply for reduced payments, re-drawing of funds etc in the future, if allowed) but the reality is that it appears to the customer that the term is reduced (and provides a psychological boost as pointed out above).

A_Frayed_Knot

Unicorn_cottage wrote: »

My knowledge is based on what Martin Lewis advises?

"4 – Ensure you ask for the repayments to shorten the term
1. Don’t let them just lower your future mortgage repayments, (this effectively spreads the debt and means you don’t get as much benefit).

2. When you overpay, ask it to keep your repayments fixed,
(which will effectively shorten the term of your mortgage, even if you’re making regular rather than lump sum payments).

3. However, please don’t read that as me saying “ask to shorten your term”.

While cutting your mortgage term from 25 year to 20 years has the same effect as overpaying, you’re locked into it so can’t change back. By simply overpaying and letting that reduce the term gradually, you have flexibility to stop overpaying in future"

As I said, when I made my 1st big o/p, I went into branch - they didn't have a clue - said I would need to phone and a note would be put on my account - not to reduce the monthly mortgage figure, that I wanted to keep it the same, the branch phoned for me and handed me the phone - I ended up speaking to a man in India :eek: Unbelievable they couldn't do that themselves :eek:


Were you expecting the term on your mortgage agreement/online mortgage to reduce when you made an overpayment each time?

It really doesn't matter as I said before as when you go to remortgage, you can reduce the term then,(that is where you get your boost)
meanwhile if you want to see your term reduced when you o/p then have a play with this fantastic wee calculator that shows everything you want to know when o/p - try different scenarios,
eg say £500 o/p - then think - Can I manage an extra £50 on top - see what difference it makes.

Gives you count month by month and your end date

http://www.whatsthecost.com/snowball.aspx

Have fun,


and my mantra is to make knotty o/p's - keep 00.00 at the end of your mortgage and soon it will all be 00.00's:D

Unicorn_cottage

Hey A Frayed Knot

Am all over the calculator and planning to make my first overpayment tomorrow.

Based on what you said i.e. no one in the bank you were with knew what to do - how many people make overpayments to reduce the amount they owe or become debt free???

A_Frayed_Knot wrote: »

As I said, when I made my 1st big o/p, I went into branch - they didn't have a clue - said I would need to phone and a note would be put on my account - not to reduce the monthly mortgage figure, that I wanted to keep it the same, the branch phoned for me and handed me the phone - I ended up speaking to a man in India :eek: Unbelievable they couldn't do that themselves :eek:


Were you expecting the term on your mortgage agreement/online mortgage to reduce when you made an overpayment each time?

It really doesn't matter as I said before as when you go to remortgage, you can reduce the term then,(that is where you get your boost)
meanwhile if you want to see your term reduced when you o/p then have a play with this fantastic wee calculator that shows everything you want to know when o/p - try different scenarios,
eg say £500 o/p - then think - Can I manage an extra £50 on top - see what difference it makes.

Gives you count month by month and your end date

http://www.whatsthecost.com/snowball.aspx

Have fun,


and my mantra is to make knotty o/p's - keep 00.00 at the end of your mortgage and soon it will all be 00.00's:D

A_Frayed_Knot

Unicorn_cottage wrote: »

Hey A Frayed Knot
Based on what you said i.e. no one in the bank you were with knew what to do - how many people make overpayments to reduce the amount they owe or become debt free???

I am/was possibly/maybe the first to ask in branch to keep my payments the same, aka - Do Not Reduce my Mortgage monthly payment , even though I had just o/p a large sum Maybe it was a tactic to put me off.
They did not make it easy for me, and was in branch for well over 1 hour & a half :mad: could have been their tactic to put me off, but I did not give up :money: although I did give up about only reducing the account/sub account that was being charged interest

Glad the calculator is of help.