Mortgage overpayment with LBS - terms help

ccbrowning

Hi

I have a mortgage with Leeds and it just has one section in my contract which talks about overpayment. I can make additional capital lump sum payments of up to 10% per year on any part without incurring early repayment charges. Such payments have a £1000 limit and reduce the balance immediately.

However, it says nothing about just increasing the monthly direct debit amount. Should I make sure I don't go over the 10% (of what I assume is the mortgage's capital balance at start of the term) of capital balance over the course of 12 months? Or is this some weird loophole?

flashg67

If you're looking to pay close to 10%, its worth asking them or doing some maths if you can work it out,so you're not penalised. With Nationwide I set up a seperate standing order, but was nowhere near the 10% limit sadly

ccbrowning

Oh, I’m nowhere near 10% capital repayment. Lol. I put most money into my S&S ISA since the return is generally much higher than my mortgage interest. However, I’m trying to reduce overall risk my diverting some to my mortgage now.

Just not clear if how monthly overpayments work since my terms only mention lump sum repayments.

csgohan4

call your lender, they will generally allow monthly overpayments, just keep an eye on it if your close to your 10% limit

ccbrowning

Well, I phoned LBS and they seem a bit clueless. They said only lump sum overpayments can be problematic. So if I just make huge monthly payments as part of my usual direct debit I don’t have to worry. However, I think I’ll try and keep the total over the year to just under 10%.

getmore4less

AS long as any payments get credited to the account and interest is daily it should not matter how they get paid.

Rather than getting them to change the DD, probably better to keep control and set up a SO that you can change whenever you want without having to contact the lender.

ccbrowning

Good idea on the standing order, hadn't though about that.

ethank

The capital is the amount you loaned. You cannot make more than 10% capital repayment per year, whether that is paid by increasing monthly direct debit or by one off payments.