Overpayment question.

So,I'm on a 2 year fixed mortgage that allows me to over pay 10% in each of those 2 years.

My mortgage is for £140000 so I can pay off 14k this year.

I only started the mortgage last month and paid off 10k 2 weeks ago,in between then and now I had a mortgage payment go out,I was asked if I wanted to have the monthly payment adjusted down to take account of the over payment or leave it as it is.

I chose to leave it as it was.

I want to pay the other£4k off next week.

My question is does the overspend on the monthly payment count towards the amount I'm allowed to over pay?

Replies

  • A_Frayed_KnotA_Frayed_Knot Forumite
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    As you opted to keep your monthly mortgage payments the same, it is not counted as an overspend.But the £10,000 you o/p will count along with the £4,000 you are planning to pay in the next few weeks.

    I can't help wondering though, why on earth you didn't pay the £10,000 before going into your mortgage, as you would have the whole year to o/p as you went along.

    The way you have o/p means you will not be allowed to o/p again until the following year (which could be May or Jan depending on your lender).

    or have I missed something?
    Always have 00.00 at the end of your mortgage and one day it will all be 0's :dance:
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  • DaveinlincolnDaveinlincoln Forumite
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    Part of the Furniture 10 Posts
    As you opted to keep your monthly mortgage payments the same, it is not counted as an overspend.But the £10,000 you o/p will count along with the £4,000 you are planning to pay in the next few weeks.

    I can't help wondering though, why on earth you didn't pay the £10,000 before going into your mortgage, as you would have the whole year to o/p as you went along.

    The way you have o/p means you will not be allowed to o/p again until the following year (which could be May or Jan depending on your lender).

    or have I missed something?

    It's a fair question...Divorce is the answer,I had to borrow the £140 k to buy her out...I knew I had money coming in the form of a bonus but I didn't know when it was coming or how much it'd be....it came sooner than I anticipated and i really want to get rid of this mortgage asap.
  • NorthernMonkey1NorthernMonkey1 Forumite
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    Sixth Anniversary 100 Posts Combo Breaker Mortgage-free Glee!
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    For details like this, it's down to the interpretation of the contract by your bank. I'd ask them.

    It's also worth reading the small print of the contract to see what the penalties are for overpayment beyond 10%. In my contract, the penalty was an amount equal to the interest saved. Even so, if you're at 10% now, put an additional into a cash isa, then when the 2 year term is up, and you go to standard variable, you will be able to pay all the contents of the isa against the mortgage. You then get a new 2 year fixed term. This way you can overpay as much as you want, but you just have to shuffle it around to avoid charges.
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