Mortgage payment versus rate query

moomi

Hi, I am making overpayments monthly and have been for some time. Today I was looking at the overpayment calculator to see how much I would benefit from the overpayments and noticed that when it asks you the rate you are currently paying ( in my case 2.22%) it says that my monthly payment is around £423 when in fact it’s nearer £500. I’ve checked this on several different calculators and got similar answers. My question is why does the amount I’m paying not tally up to the rate? I haven’t borrowed any extra or missed any payments, or took any payment holidays and pretty certain there were no fees added (even if there was, would they be £70 a month for 8 years?) Can anyone explain this? The customer service for mortgages is closed today . Thanks for reading 

getmore4less

What balance and full term are you using?

If the reduced balance from overpayments then the calculation will give a lower payment for remaining term.

moomi

I was using the current balance and term. I have made the usual payments and overpayments as the original term was 21 years but I’ve changed deals since then. 

Thrugelmir

The mortgage lender will have set repayments at the level required when you took the product out. By overpaying you are speeding up repayment of the mortgage. Which is presumably your objective. Your lender will not revise your monthly payment until you opt for a new product or there is a change in the rate of interest charged. 

K_S

moomi said:

Hi, I am making overpayments monthly and have been for some time. Today I was looking at the overpayment calculator to see how much I would benefit from the overpayments and noticed that when it asks you the rate you are currently paying ( in my case 2.22%) it says that my monthly payment is around £423 when in fact it’s nearer £500. I’ve checked this on several different calculators and got similar answers. My question is why does the amount I’m paying not tally up to the rate? I haven’t borrowed any extra or missed any payments, or took any payment holidays and pretty certain there were no fees added (even if there was, would they be £70 a month for 8 years?) Can anyone explain this? The customer service for mortgages is closed today . Thanks for reading 

@moomi Lenders can apply overpayments in different ways (the main ones being reduce term, reduce monthly payment or keep everything the same until the end of the current product). With many mainstream lenders, you should be able to ask that they reduce the monthly payment if that's what you want. In any case, rest assured that you are saving on interest by overpaying. 

As an example, here's how Nationwide approaches it https://www.nationwide.co.uk/mortgages/existing-mortgage-members/overpayments/ -