Overpayment and monthly payments

Robster88

Hello, 

I have a question about mortgage overpayments and it reducing (or not) the monthly payments. 

In mid July I paid a lump sum (£22,000) off my mortgage. My mortgage direct debit came out on the 1st of August and it was for the same amount as before (£431), whereas I had expected it to be lower due to the reduction in the amount I have borrowed. 

I rang Halifax (my mortgage provider) and although it was very difficult to hear what the guy on the phone was saying (bad line) he said it was because I hadn’t requested that the overpayment be used to reduce my monthly payments. He said I could ask for the future payments to be lower from now on. 

My question is, what exactly were the two scenarios? How, when I reduced by borrowing by £22k, did my monthly payment stay the same? Was this because they were reducing the term instead? I would have asked the chap I spoke to on the phone, however as it was so difficult to hear him I probably wouldn’t have heard the answer. 

CSI_Yorkshire

If they didn't recalculate the monthly payment, this means that a portion of that £431 is now an overpayment every month in comparison with before your lump sum.

The term will have reduced because of it.

RelievedSheff

Your overpayment will have reduced your term rather than reducing your payment. 

Our mortgage is with the Halifax and we currently overpay by £106 per month which is soon to be increased to £206 per month. 

This is reducing our term rather than reducing our monthly repayment.

chanz4

You wont notice any difference until they do your yearly statement