Overpaying 10% on a TSB mortgage.

Coffeekup

I'm just over 2 years in on a 10 year fixed rate with TSB which some heavy fee's, for the first 5 year's decreasing by 1% year on year after that.
I started overpaying through bank transfer in the second half of last year, £1,300 in total so far in dribs and drabs. I've planned overpayments in a spreadsheet for the remainder of the term. If I stay on track I'll hit the 10% limit in 2023, which will be done by monthly overpayments. In 2024 I'll have enough saved to pay a 10% lump sum in the beginning of the year.

But reading the following thread, it has left me scratching my head about overpaying... https://forums.moneysavingexpert.com/discussion/6243673/confused-over-10-mortgage-overpayment#latest
I've read it twice and I'm still no better off.

As of yet my payments haven't changed, I'm presuming it's because what I haven't paid off is not that much. Am I correct?

If I do pay a 10% lump sum in 2024, ideally I'd like to keep my monthly payments (principal) the same, if TSB were to change my payments my choice would be to pay more per month from then on in.

When I do make bigger over payments, is it best to call them and make the payment over the phone than, doing it through bank transfer to stop confusion?.

MFWannabe

Not sure what you mean about hitting 10% limit in 2024? You’re allowed to make 10% overpayments each year. 

Your contracted payments won’t change until your 10 year fix ends regardless of any overpayments. At the end of your 10 year fix TSB will lower your payments and keep the term the same unless you ask them to change the term (checks will be required if you do this) or you can keep term sane and continue to overpay which will result in shortening the term anyway 
Have a read of TSB website: 
https://www.tsb.co.uk/mortgages/existing-customers/making-extra-payments/

Thrugelmir

Coffeekup said:

As of yet my payments haven't changed, I'm presuming it's because what I haven't paid off is not that much. Am I correct?

The 10% overpayment limit is an annual one. 

The lender will not automatically change your direct debit in any event. Systems aren't built that way. 

getmore4less

Thrugelmir said:

Coffeekup said:

As of yet my payments haven't changed, I'm presuming it's because what I haven't paid off is not that much. Am I correct?

The 10% overpayment limit is an annual one. 

The lender will not automatically change your direct debit in any event. Systems aren't built that way. 

Some are,  my  DD changes each month depending what is needed to pay the mortgage off on the full term schedule.

Coffeekup

getmore4less said:

Thrugelmir said:

Coffeekup said:

As of yet my payments haven't changed, I'm presuming it's because what I haven't paid off is not that much. Am I correct?

The 10% overpayment limit is an annual one. 

The lender will not automatically change your direct debit in any event. Systems aren't built that way. 

Some are,  my  DD changes each month depending what is needed to pay the mortgage off on the full term schedule.

Ahh yes Getmorforless, you was in the post I referred to.  So any ideas how I approach this in 2023, especially 2024?

getmore4less

Check that link to how TSB deal with overpayments.

I think you can structure overpayments to keep payment the same 

Even if you can't  the payment reducing has a relatively small effect over short term but you have that long fix, not crunched the numbers over 6 more years with annual reset and a full 10%

Depends on amount rate and full term.

Keep an eye on ditch your fix is LTV is good and your rate high.

Coffeekup

getmore4less said:

Check that link to how TSB deal with overpayments.

I think you can structure overpayments to keep payment the same 

Even if you can't  the payment reducing has a relatively small effect over short term but you have that long fix, not crunched the numbers over 6 more years with annual reset and a full 10%

Depends on amount rate and full term.

Keep an eye on ditch your fix is LTV is good and your rate high.

My rate is relatively low, 2.54%, I could have got a better mortgage with a company like nationwide who let u pay 10% of the mortgage when u took it out every year.
Tsb is 10% of the year's balance on 1st of January. I  don't want to pay and find out my principal payments are going down. As my overall goal is to get rid of the thing, and limit the interest. If I stick to my plan I'll be paying 15,000 in interest over the 10 year's.

kimwp

Coffeekup said:

My rate is relatively low, 2.54%, I could have got a better mortgage with a company like nationwide who let u pay 10% of the mortgage when u took it out every year.
Tsb is 10% of the year's balance on 1st of January. I  don't want to pay and find out my principal payments are going down. As my overall goal is to get rid of the thing, and limit the interest. If I stick to my plan I'll be paying 15,000 in interest over the 10 year's.

Talk to TSB and ask them what you need to do to make sure the overpayments reduce the term rather than the monthly payment - if it's like mine, you just ask them to change their settings so that any overpayments you make change your term. As you've said, if you are going to be hitting the 10% overpayment allowance each year, you don't want to them to reduce your monthly amount as it just means that effectively you can overpay less each year without incurring a charge (in addition to the fact that your allowed 10% reduces each year.) and you save less interest.

If you do want to increase your monthly allowance, you can ask them if they will do this - if they do, they will do an affordability check, so best to keep outgoings low for three months before etc - all the things that people are advised to do before a mortgage application. A lot of people on the site will get worried about increasing the monthly payment and it is something to consider carefully as you might regret it if your income reduces. However if you are easily hitting the 10% overpayment limit, you're clearing your monthly payment by miles and really it's no different to applying for a mortgage anyway - you tie in to a monthly payment at that point then. I did it (while in my fix) last year because I was saving more than the 10%, so it's possible to do it in the fixed period - I just couldn't bring the end of the term any further forward than the end of the fixed period.

MFWannabe

Coffeekup said:

getmore4less said:

Check that link to how TSB deal with overpayments.

I think you can structure overpayments to keep payment the same 

Even if you can't  the payment reducing has a relatively small effect over short term but you have that long fix, not crunched the numbers over 6 more years with annual reset and a full 10%

Depends on amount rate and full term.

Keep an eye on ditch your fix is LTV is good and your rate high.

My rate is relatively low, 2.54%, I could have got a better mortgage with a company like nationwide who let u pay 10% of the mortgage when u took it out every year.
Tsb is 10% of the year's balance on 1st of January. I  don't want to pay and find out my principal payments are going down. As my overall goal is to get rid of the thing, and limit the interest. If I stick to my plan I'll be paying 15,000 in interest over the 10 year's.

Did you read the TSB link? You can make overpayments of 10% per year before incurring any charges 
You are only 2 years into a 10 year fix; so you either overpay every month as much as you can as long as you don’t go over the overpayment limit of 10% then see how much mortgage is remaining at the end of the 10 year fix. Use this calculator to see what a difference overpayments make: https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

OR 
You run the calculations through ditch the fix to see if you could get a lower interest rate but I would say you have hefty ERC on a 10 year fix? 

getmore4less

2.54Coffeekup said:

getmore4less said:

Check that link to how TSB deal with overpayments.

I think you can structure overpayments to keep payment the same 

Even if you can't  the payment reducing has a relatively small effect over short term but you have that long fix, not crunched the numbers over 6 more years with annual reset and a full 10%

Depends on amount rate and full term.

Keep an eye on ditch your fix is LTV is good and your rate high.

My rate is relatively low, 2.54%, I could have got a better mortgage with a company like nationwide who let u pay 10% of the mortgage when u took it out every year.
Tsb is 10% of the year's balance on 1st of January. I  don't want to pay and find out my principal payments are going down. As my overall goal is to get rid of the thing, and limit the interest. If I stick to my plan I'll be paying 15,000 in interest over the 10 year's.

you don't give enough details to do the numbers, amount, end date, payment
as an example 
£100k 2.54% over 21 years  £512.43pm with a 10%  overpayment at the beginning of each year

Interest over the 10 years
~£20,500 no overpayments
~£12,500 10% with recalculate payment
~£10,500 10% payment the same

The difference in interest between the recalculated payment after the 10% and keeping the payment the same is around £2000 over the 10 years, yours will be around 5/6 years so proportionally less