Can any explain this?

JMA74

your term will change in practice as your mortgage balance will reach zero earlier than planned due to the overpayment

Your term will not change on paper as they would be required to do a full assessment to do that

kingstreet

You will achieve a reduction in the term without requesting a contractual reduction in the term.

Sg28

tony3619 said:

So let me see if I'm understanding this correctly

If I overpay i will obviously reduce the amount I owe, but I cant just ask the bank to use it to reduce my mortgage term without them doing a affordability review? 

So my question would be if I'm overpaying and it's not showing as a reduced term will they just spread the outstanding balance automatically over the the same term? Or would I just end up paying it off X amount of years earlier and my account would still show X years

Yes they will recalculate your future payments each year. So if you overpay this year next year your repayments be lower, like you say to spread the remaining amount over the existing term. 

You can then opt to keep your payments at the original amount. So effectively making regular monthly overpayments, and each year your minimum payment will reduce and your overpayments increase. 

Just be careful that this doesnt put you over any overpayment limits and incur early repayment charges. 

MorningcoffeeIV

The latter.  And that's what you want. Best of all worlds.

tony3619

If I was to overpay as a lump sum can they change the mortgage length without affordability checks? Not that the checks matter I'm just trying to understand what the process is 

Newbie_John

Not sure why would they need to do affordability checks, your monthly payment remains the same - so from monthly perspective it costs you the same - if the original checks confirmed you can afford it that's enough.