Cannot overpay

katie4

Deleted_User wrote: »

Why are you taking an all or nothing approach to this?

i didn't read it correctly i read it as 10% not up to 10%
doh! :rotfl:

katie4

what does it mean "you cannot overpay but you can make capital payments" ? whats the difference? thanks

Mahsroh

katie4 wrote: »

what does it mean "you cannot overpay but you can make capital payments" ? whats the difference? thanks

I was wondering that myself. Seems little difference to me. Only thing I can think of is they are saying you can't overpay meaning change your monthly DD to a higher amount, but you can make capital payments of up to 10% of the balance per annum (in the form of lump sum payments). I'm only speculating though. I'd ask your lender to clarify exactly what they mean.

thriftylass

Mahsroh wrote: »

I was wondering that myself. Seems little difference to me. Only thing I can think of is they are saying you can't overpay meaning change your monthly DD to a higher amount, but you can make capital payments of up to 10% of the balance per annum (in the form of lump sum payments). I'm only speculating though. I'd ask your lender to clarify exactly what they mean.

I think you're right. I wouldn't change our direct debit but make individual payments every month up to the amount I can afford. I.e DD is let's say 650 I make a capital repayment of 150 every month by transfer and remain way under the 10%. Basically 12 little "lump sum" payments.

Mahsroh

thriftylass wrote: »

I think you're right. I wouldn't change our direct debit but make individual payments every month up to the amount I can afford. I.e DD is let's say 650 I make a capital repayment of 150 every month by transfer and remain way under the 10%. Basically 12 little "lump sum" payments.

I do the same. I have my DD going out then a further standing order each month as an overpayment. Though that's my choice - the lender will let me do it either way..... but then I am on a tracker so restrictions on my mortgage with regard to overpayments.

wantonnoodle

We have a DD going out, then a further standing order too.

Our extra payment does not affect the monthly DD amount (I know some lenders do), instead it will ultimately reduce the term. We can overpay by up to £1000 per calendar month without tripping ERCs (we're on a discounted variable rate).

OP, I would suggest you confirm with your lender if you pay lump sums toward the capital, will it reduce your DD payment or will it reduce the term? If the DD payment is what gets reduced, it can prove tricky to manage, as your additional payment then has to increase monthly to offset the decrease in DD, or you lose the benefit. Try and get it to reduce the term if you can, as it will stabilise your monthly payments and you can then just leave it ticking over in the background once set up.

Thrugelmir

katie4 wrote: »

what does it mean "you cannot overpay but you can make capital payments" ? whats the difference? thanks

Who is your lender?

katie4

Thrugelmir wrote: »

Who is your lender?

Monmouthshire building society

getmore4less

From a 2y fix description

Regular overpayments are not permitted during the first 2 years from completion. Regular overpayments are amounts collected with, and in addition to, your monthly mortgage payments. You may make capital repayments of up to 10% of the original loan amount in each of the first 2 years without an early repayment charge. However, during the first 2 years any additional amount repaid above the 10% permitted will be subject to an Early Repayment Charge of 2% of the amount repaid in years 1 & 2. Following receipt of a lump sum payment, the amount that you owe, and so the amount of interest you pay, is reduced immediately

enthusiasticsaver

I would change the term to 15 years if you are comfortably able to afford the higher payment. As you have now realised you can overpay by up to 10% by making lump sum repayments. All lenders deal with overpayments differently and some alter the monthly repayments each time you make a lump sum repayment which you presumably don't want. For this reason I would think it would be less hassle to just reduce the term and pay the higher payment and then if you can afford it make one or two lump sum repayments up to the maximum while stressing you want to reduce the term and not the monthly payment.