Trying to repay the mortgage quickly - confused about penalties

Conmuddled · 20 August 2018 at 10:36AM

Long and short of it is that due to miscommunication we ended up borrowing more than we needed and so want to pay what we can off the mortgage off asap to get the interest payments down. Further background is we were told if we wanted to borrow less than we'd originally asked as we came up to exchange there was a risk a) the mortgage wouldn't be ready in time b) we wouldn't get the same deal.

We have a Barclays mortgage and were always told if we paid more than 10% of the outstanding amount we'd have to pay a very hefty penalty. That much was clear.

I had also originally been told I could make 10% repayments once a year on the anniversary of taking out the mortgage. I haven't looked for it, if it was by phone I'll have a recording of it, if e-mail I'll have it in writing.. but that point seems moot now anyway as you'll see.

So when I rang up to find out this date I was told a series of things which confused me entirely.

1) I could make a payment of up to 10% a year without incurring penalties. This is what I expected.

2) I could make a 10% repayment only on the anniversary date of the mortgage amount being paid.
3) But the last repayment I made didn't count anymore and I could make another one. Apparently this was due to a change in terms which was never relayed to me.
4) If I made an overpayment of less than 3 times my contractual amount this would not count towards the annual 10% limit.

Now what utterly confused me is that when I asked if I could really make an overpayment of 3 times my contractual monthly amount everyday without incurring charges and without it going towards my 10% limit, the Barclays Mortgage phone line said yes. I also had it confirmed by the web chat.

Obviously I have a telephone recording of verbal confirmation I could make this payment and a saved pdf of where I was told I could make the payments daily.

What seems to be happening is Barclays class a payment of more than 3x your contractual amount as a part redemption which immediately reduces your contractual amount and which counts towards the 10% limit, whereas they class less than 3x your contractual amount as an overpayment which doens't trigger the recalculation and doesn't count towards the limit.

What is bothering me is that it seems to make no sense. Why on earth can I repay a sizeable chunk everyday without incurring penalty but I can't just repay what I can afford to repay in a lump sum!

I also have no idea why my previous payment of well over 3x the monthly amount didn't count to the limit; but gift horse and all.

Does anyone else have experience of this odd situation?

p.s. if the mention upsets anyone, yes I informed Barclays I was recording the call when asking for confirmation of what I could repay.

Conmuddled · 24 August 2018 at 10:54AM

Today when I spoke to someone to get confirmation I would be not be penalised for making the overpayment less than 3 times my contractual payment amount I was told that the Barclays system was not working as expected with regards to how overpayment allowance was calculated. I was informed that there had been internal discussion that it might change but there was no date yet at which it would be changed. I was also of course told I could continue to make payments without incurring a penalty.

I'll continue to call in every day and make the payments if they confirm I won't be penalised but clearly the writing is on the wall that they will change their system at some point in the future.