Direct line overpayment on mortgage does not seen right. We still owe despite overpaying 100 a month

AnotherJoe

So, two things.

1 (as i posted at the start and others did also) you didnt increase your £100 overpayments to compensate for when the direct debit was reduced by them to keep the end date the same,  so in effect you werent overpaying much at all, but .......  but far FAR worse,

2. Why on earth didnt you remortgage years ago? For someone overpaying to reduce the term, you should have had a huge focus on the interest rates. Reducing those would have been far more effective than"overpaying".

Theres no good news here unfortunately. No one forgot to take thousands off your mortgage which you can now claim.

Petriix

If it worked how you though then you would have paid off the original loan 9 years earlier and saved around £3000 in interest. I can't speak for the additional borrowing as it's not shown on the statements you uploaded; but it would have also been paid off earlier and saved further interest of maybe £1000.

With my mortgage, the default option is for overpayments to reduce future monthly payments, but there is an option within my online account to specify that I want to reduce the term instead. It looks like you never specifically asked them to reduce the term and that you incorrectly assumed it would automatically happen.

Whether or not you have grounds for complaint will depend entirely on the terms and conditions you agreed to when you took out the mortgage. If you have a record of those anywhere then check the section on overpayments.

graylinghunter

Petriix said:

If it worked how you though then you would have paid off the original loan 9 years earlier and saved around £3000 in interest. I can't speak for the additional borrowing as it's not shown on the statements you uploaded; but it would have also been paid off earlier and saved further interest of maybe £1000.

With my mortgage, the default option is for overpayments to reduce future monthly payments, but there is an option within my online account to specify that I want to reduce the term instead. It looks like you never specifically asked them to reduce the term and that you incorrectly assumed it would automatically happen.

Whether or not you have grounds for complaint will depend entirely on the terms and conditions you agreed to when you took out the mortgage. If you have a record of those anywhere then check the section on overpayments.

my assumption to overpay 100 a month was based on the advert  sold directed to this type of mortgage it implies overpayment reduces term this was their pitch .Directline Mortgage Advert On Channel 5 UK TV 2001 ...www.youtube.com › watch

graylinghunter

getmore4less said:

Not seeing anything wrong on the numbers on a quick sweep over them.
There are a few time when rates went up but the payment was not recalculated would have to look for a pattern to see why maybe the overpayment meant it did not have to go up. 
Page 1. 2000/2001 looks like it started out as a Base+1% tracker.
the rates seem to change with base rate timing but not by the same amount.
by the time we get to 2009 it is sitting at around base +3.5% for most of the next 10 years there are a couple of changes that do not fit with BOE rate changes you need to dig out the change of rate letters
The recalculation of payment every Sept explains why you ended up where you are not reducing the term.
You should be kicking yourself you have been on such a high rate for so long
Did you never think of reviewing your mortgage rate?

quite simply no perhaps it was one area i wasn't savvy enough to mess about with... 

Petriix

graylinghunter said:

Petriix said:

If it worked how you though then you would have paid off the original loan 9 years earlier and saved around £3000 in interest. I can't speak for the additional borrowing as it's not shown on the statements you uploaded; but it would have also been paid off earlier and saved further interest of maybe £1000.

With my mortgage, the default option is for overpayments to reduce future monthly payments, but there is an option within my online account to specify that I want to reduce the term instead. It looks like you never specifically asked them to reduce the term and that you incorrectly assumed it would automatically happen.

Whether or not you have grounds for complaint will depend entirely on the terms and conditions you agreed to when you took out the mortgage. If you have a record of those anywhere then check the section on overpayments.

my assumption to overpay 100 a month was based on the advert  sold directed to this type of mortgage it implies overpayment reduces term this was their pitch .Directline Mortgage Advert On Channel 5 UK TV 2001 ...www.youtube.com › watch

Yes, your assumptions are apparent. It's not, however, clear whether your assumptions (based upon an advert) were reflected in the actual contract you entered into or indeed any advice you received at the time.

It is clear that you didn't query your payments reducing or pay any attention to the interest rate you were paying. The latter will have cost you significantly more than the former.

graylinghunter

I suppose this post should be left to show others changing mortgage  should be considered. 

AnotherJoe

graylinghunter said:

I suppose this post should be left to show others changing mortgage  should be considered. 

And also the mechanics of overpayment, though in many cases people are much better advised to pay more into pensions and ISAs than overpay and there's a whole forum of people here,e specially high rate taxpayers, almost literally burning money by over concentrating on overpayment.

But anyway, yes mortgage rate is fundamental. 

getmore4less

graylinghunter said:

Petriix said:

If it worked how you though then you would have paid off the original loan 9 years earlier and saved around £3000 in interest. I can't speak for the additional borrowing as it's not shown on the statements you uploaded; but it would have also been paid off earlier and saved further interest of maybe £1000.

With my mortgage, the default option is for overpayments to reduce future monthly payments, but there is an option within my online account to specify that I want to reduce the term instead. It looks like you never specifically asked them to reduce the term and that you incorrectly assumed it would automatically happen.

Whether or not you have grounds for complaint will depend entirely on the terms and conditions you agreed to when you took out the mortgage. If you have a record of those anywhere then check the section on overpayments.

my assumption to overpay 100 a month was based on the advert  sold directed to this type of mortgage it implies overpayment reduces term this was their pitch .Directline Mortgage Advert On Channel 5 UK TV 2001 ...www.youtube.com › watch

Overpaying does reduce the term as long as you keep the payments at the right level.
You reset your payments once a year(mostly down) to put the projected term with overpayments  back to full contractual term.
Without seeing your documentation it is hard to know if that was explained at the time.
One thing to note you will have people say they get options with their mortgages to select reduce payment or term, that's not really what is happening as neither change the contractual term(for most lenders).
The options really mean reduce payment or keep them the same, some lenders have an extra option of never reduce payments on rate changes but put them up if needed.
Although you did not get all the benefits you thought you would  your payments have been a lot lower than they would have been if you had kept the payments at a level to make the £100pm work as you thought.
Doing a rough calculation based on £53k in 2009 at 4% over 11 years(132months).
£53k 4% £497  interest £12,598  (132months)
£53k 4% £597 interest  £9,946 (106months)
resetting payment once a year the total interest about £10,900 (128months)
BY slowing down your payments wit hthe reset each year it has cost about £1k in extra interest over keeping the payments high.
if you could have got a better rate say 2%
£53k 2% £448 interest  £6,081 (132months)
£53k 2% £548 interest  £4,842(106months)
that would have had interest of around £5300 on the resetting option