Question about overpayment

Stratosdj

Hi everybody,

I have started to make overpayments in my mortgage and the amount deducted from it is not what I was expecting.

I am putting the numbers here for a better idea:

Amount pending: 170149£

Overpayment of: 1100£

Overpayment fees: 50£

Expected amount pending after the overpayment: 169099£

However, the amount pending after the overpayment it was: 169336£

There are 28 years and 7 months to finish it and an interest of 2.04%

Can anybody tell me how is this working please as I don´t understand where is that difference coming from

Many thanks in advance and if you need more information to work it out just let me know

MWT

What were the dates of the various numbers?

They will have recalculated the interest due as at the date of the over payment, before deducting the over payment and restating the remaining amount due..

Stratosdj

MWT said:

What were the dates of the various numbers?

They will have recalculated the interest due as at the date of the over payment, before deducting the over payment and restating the remaining amount due..

Hi MWT,

First of all thanks for the reply.

What do you mean with the dates?? the day of the month, the month of the year,...

Can you explain a bit more how is that interest calculated to simulate myself how much is going to be deducted on my next overpayment??

Thanks once again

getmore4less

Why are you paying 5% fees on overpayments.

Don't you have any penalty free overpayments?

You need to check carefully on timings  often there are better option when fees have to be paid.

All the details of the mortgage needed including lender, amounts, rates, terms, fees, payments 

MWT

Stratosdj said:

MWT said:

What were the dates of the various numbers?

They will have recalculated the interest due as at the date of the over payment, before deducting the over payment and restating the remaining amount due..

Hi MWT,

First of all thanks for the reply.

What do you mean with the dates?? the day of the month, the month of the year,...

Can you explain a bit more how is that interest calculated to simulate myself how much is going to be deducted on my next overpayment??

Thanks once again

If you post the details that getmore4less requested you'll get all the calculations you could ever need.

If you want to just sort it out for yourself then you need to note the date of each of your numbers and calculate the interest between them on a daily basis.

So for example, if that 'amount pending' was the amount after your last monthly payment made on say the 4th of the month and you made the overpayment 20 days later, you would first add 20 days interest to the amount pending then deduct the amount of the over payment after reducing by the fees they deducted..

Stratosdj

getmore4less said:

Why are you paying 5% fees on overpayments.

Don't you have any penalty free overpayments?

You need to check carefully on timings  often there are better option when fees have to be paid.

All the details of the mortgage needed including lender, amounts, rates, terms, fees, payments 

Thanks both for answering.

I pay a fee of 50£ every time I make an overpayment, it doesn´t matter the amount.

I sent the payment on the 26th of Feb and they processed on the 1st of March.

Lender is Bank of Ireland through Post office.

Interest rate fix for 2 years of 2.04%

Previous regular payment taken on 18th of Feb

I hope this can help.

Many thanks once again.

getmore4less

Obviously won't know what they have done but can do some guessing.

Starting with BOI?PO  and that £50  OP fee   where is that in the T&C not seeing it in the docs online.
links at bottom to tariffs.
https://www.postoffice.co.uk/mortgages/remortgage
Also looking at a new deal  it says 

You can overpay up to 10% of your outstanding mortgage balance each year without incurring any charges, subject to a minimum payment of £500

That £50 needs further explanation or investigating and why you don't have 10% totally free overpayments.


anyway moving on 
All the details of the mortgage needed including lender, amounts, rates, terms, fees, payments 

OK have to work some of these out.


lets go with this was a 30y full term 2y fix and you are 1y 5 months into that with 7months to go before totally ERC free

7 months at  2.04% is a saving of 1.2% so with a £50 fee you need a min payment of £4,200 to break even on the fee so don't bother with OP just save them for a bit  more below. 

This seems to be the situation for the 7month left on the 2y fix.

amount	rate	payment	owing
£170,149.00	2.04%	£655.07	£167,575.16

Of that £655 payment the interest is £289 that month
Even a full months interest would not account for the £237 difference from  what you expected

if regular payment is 18 march that would be around £113 interest up to the 1st March still no match

what if we assume there  may not be a £50  fee then the difference would be £287
back to are you sure there are no ERC free overpayment options 
.

My guess is as the payment was processed on 1st March they used it for your regular payment and interest for March.

if that guess is right when the regular payment goes out on 18th(check they take it) that should change it back to close to normal