Overpaying/reducing term

Marcusian

Please, someone help before I scream. (been on phone on hold to Halifax for an hour lol)
I want to over pay on my mortgage, a monthly payment recurring and adhoc lump sums as and when. I won't go over the 10% and I am aware of it for the next 5 years.
I am keen to get my 23 year mortgage done in half the time, potentially within first 10 years. 
Anyway, what confused me is that i read, and then was told by Halifax that I had to arrange to reduce the term? When I made my first over payment (lump sum), I was told to ring up and arrange to reduce the term. However, today they said that my term would reduce naturally as i would just over pay until the mortage was zero?
The second explanation makes sense to me, just keep paying it down and eventually you reach a point of zero.
My brain is frazzled, so can please someone help? Do i need to go through the mortgage advisor thing where they check affordability etc to reduce the term, or can i just keep over paying, under the 10% limit and it will naturally?

L_T_88

Just keep overpaying and make sure they don't reduce your Direct Debit.

getmore4less

Contractual term sets the contractual payment

What you pay determines the real term.

Even if they reduce the contractual payment due to overpayments you can just increase the overpayments

When you hit any ERC free limits rethink.

as long as not on long fixes often just saving up and an extra overpayment as switch does the job.

kimwp

Some banks take different approaches depending on the amount overpaid and method/frequency, so it might just be to do with that. Eg with mine, they reduce the term automatically if you make an overpayment under 500 pounds, but reduce the monthly payment if you make an overpayment over 500 pounds (unless you ask them to reduce the term). It might also be that as you rang them up the first time, they have set it so that it always happens when you make an overpayment.

Thrugelmir

If you request a reduction in term length. Then the lender is obliged to perform an affordability check. No guarantee that interest rates will remain low indefinitely.  Banks are under a regulatory duty to lend responsibility. 

kimwp

Thrugelmir said:

If you request a reduction in term length. Then the lender is obliged to perform an affordability check.

Only if the reduction in term length increases your monthly payment.

Marcusian

Right now, i am going to over pay 100 a month, then adhoc make other payments. So just keep doing that and watch the balance go down over time, which in turn means i am mortgage free sooner?

getmore4less

kimwp said:

Some banks take different approaches depending on the amount overpaid and method/frequency, so it might just be to do with that. Eg with mine, they reduce the term automatically if you make an overpayment under 500 pounds, but reduce the monthly payment if you make an overpayment over 500 pounds (unless you ask them to reduce the term). It might also be that as you rang them up the first time, they have set it so that it always happens when you make an overpayment.

I suspect they don't really reduce the term what they do is keep the payment the same.

check your statements and see if your contractual term has changed

kimwp

getmore4less said:

kimwp said:

Some banks take different approaches depending on the amount overpaid and method/frequency, so it might just be to do with that. Eg with mine, they reduce the term automatically if you make an overpayment under 500 pounds, but reduce the monthly payment if you make an overpayment over 500 pounds (unless you ask them to reduce the term). It might also be that as you rang them up the first time, they have set it so that it always happens when you make an overpayment.

I suspect they don't really reduce the term what they do is keep the payment the same.

check your statements and see if your contractual term has changed

They keep the payment the same and reduce the term (they have to change one otherwise you would pay more than you owe them)
Whenever I have made an overpayment, they sent a letter stating the new term.

planteria

Marcusian said:

Right now, i am going to over pay 100 a month, then adhoc make other payments. So just keep doing that and watch the balance go down over time, which in turn means i am mortgage free sooner?

yes, and i can understand your frustration. fwiw i wouldn't want to formally reduce the term, and go through that process with the lender, i'd just want to overpay as i choose, be it regularly or in lump sums, but have the flexibility to stop overpaying and leave the remainder of the mortgage to tick along to the original term if i so choose. we never know what the future holds, but the thought to clear it within 10 years is a good one.