Accord Mortgage Overpayment

sirarthur

Hi, we have a 15 year mortgage with Accord, (currently 3 years into a 5 year fix @2.49%). I phoned them to ask about overpayments but when I said I would not want the monthly amount to reduce he said that they review the mortgage annually so the monthly amount would be reduced and the term would reset each year. Is this normal with all companies? I understood that the most effective way to overpay was to keep the monthly amount the same and let the overpayments 'naturally' reduce the term. Have I misunderstood something (very likely)?

K_S

@sirarthur Whether the term is officially reduced or not, you can still achieve the same impact by overpaying https://blog.moneysavingexpert.com/2014/10/dont-shorten-your-mortgage-term-if-you-can-overpay/

eclipse17

You have to ask them to set a fixed/static payment, so your monthly payment stays the same even if you overpay. Just bear in mind that part of your static payment will then technically be an overpayment, so it will count towards your 10% limit for the calendar year. (I recently paid off a mortgage with Accord and that's exactly what I did: set a static payment and also made annual overpayment up to the 10% cap).

sirarthur

Thanks so much for the replies, much appreciated.

getmore4less

Reducing the payment often results in tiny bits of extra interest even when you hit the 10%,  you just carry excess over to the next annual reset and any left over after that at the end of the fix.
if under the 10% you can just overpay a bit more to keep the payment the same

On £100k 2.49%  15y term with a max OP at the start of the year the extra interest is £9 if the payment is recalculated(.£667>£600)
(That scales up to your mortgage size)

that can be mitigated by savings account.