First Direct- reduced monthly mortgage payment

Khaderbhai

Called up First Direct last month to change my Standing Order date for the mortgage and they have changed it but also changed the amount I pay too, is this right? They are saying they have adjusted it down due to overpayments, but my mortgage documents suggest the usual minimum repayment mortgage amount should stay fixed whilst I am in a fix. For example, was expecting to pay the same just on a different day. Looks like its for the interest only which looks odd? Its a repayment mortgage. 

Not complaining as can put the money into a savings account but just seems odd? Thanks 

MWT

If the result of your change is that there is less than one month between the previous and the next payment then that could result in a lower interest component for the next one, then reverting to the 'normal amount after that...

Khaderbhai

Thanks, I thought that was the case at first, but it seems to be the same for the next standing order too.

penners324

Sure it's not direct debit?

Khaderbhai

No its a standing order

MWT

Khaderbhai said:

No its a standing order

Then going back to your first post...

Khaderbhai said:

They are saying they have adjusted it down due to overpayments...

It sounds like your previous standing order was too high and they have now adjusted that down accordingly.

Probably worth a phone call to check after the first payment goes through though, just in case...

Generally though I wouldn't advise standing orders for mortgage payments as it is too easy to miss a notice of an increase and go into arrears accidentally...

Khaderbhai

Thanks. Yes they have confirmed the change of date has triggered a recalculation. 

kwangomango

Khaderbhai said:

Thanks. Yes they have confirmed the change of date has triggered a recalculation. 

It will now take you longer to pay off the loan though (incurring more interest) as your monthly repayment has dropped. You may or may not be able to offset that with a savings account depending on how the interest rates compare.

Khaderbhai

1.99% mortgage so can for sure gain from the interest differences. Yes I would incur more interest… If I let it continue to run.