Overpayments on Barclays mortgage

planetmatt

id311299 said:

planetmatt said:

What I know for sure is that overpayments below 3x contractual monthly payments go to a special pre-payment balance, so they technically don't count as 'overpayments'. You can even get the money sat in this pre-payment balance back in the sense that they allow you to reduce your monthly payments, so you can effectively pay your monthly installments with that money. I think Barclays as a general rule only apply ERC to part redemptions, i.e. money that go straight to reducing the principal. Pre-payment balance doesn't count.

I would advise to talk to someone through the online chat and ask them to tell you how much money you have in the pre-payment balance, what can you do with that money, and explain in what circumstances ERC is applicable to using funds in your pre-payment balance. This also gives you a written record to keep and show in the future.

That is my understanding too. 

 The pre-payment balance does however show against the outstanding mortgage balance both online and on the annual statement and no interest is charged on the value of the pre-payment balance so it is a little confusing as there's no clear distinct separation between the two pots. 

id311299

planetmatt said:

That is my understanding too. 

 The pre-payment balance does however show against the outstanding mortgage balance both online and on the annual statement and no interest is charged on the value of the pre-payment balance so it is a little confusing as there's no clear distinct separation between the two pots. 

If you read your mortgage offer carefully, you will notice that it distinguishes between 'capital repayment' and 'overpayment'. It says that ERC only applies to capital repayments.

planetmatt

Spoke to a mortgage advisor and my understanding was correct.

You can make as many and as much overpayment as you like per year, exceeding the 5 or 10% overpayment limit as long as each transaction does not exceed 3 x mandatory contractual amount.

Was also advised to avoid making payments on weekends in case they roll forward and all apply on a Monday, and also avoid manual over payments on same day as your normal direct debit if you've set up regular overpayments as they'll be added to the manual overpayment amount. 

glenrothes

All the above matches what I've been told when speaking to customer service.

It is worth being aware (from my mortgage docs):

"Your overpayment balance is not a bank account. This means that it's not a protected deposit covered by the Financial Services Compensation Scheme (FSCS) or any similar scheme."