Overpaying my mortgage.

Carl2510

Evening all,

I’m looking at making a lump sum payment to my mortgage lender to reduce the interest and reduce my term in the long run.

I’m with Halifax and just want to make sure I’m doing it correctly, can this all be done through the app? Or would I need to make an appointment ?

I know my limit is 10% which is fine, I’m wanting to do this so I can get it as low as possible before I need to remortgage In two years and 4 months time. 

Once I’ve done this lump sum I then plan on overpaying for the next two years before my mortgage is up for renewal.

any help would be appreciate.

Thanks
Carl.

Brie

I think you'll need to talk to them to confirm how the overpayments affect your mortgage.  Some people (various banks) say it reduces their monthly payments but not the term.  Others it seems to be the other way around.  I don't think it will make a significant difference to you over the next 2 years as it will be bringing down the whole amount owed prior to renewal.  

Carl2510

Brie said:

I think you'll need to talk to them to confirm how the overpayments affect your mortgage.  Some people (various banks) say it reduces their monthly payments but not the term.  Others it seems to be the other way around.  I don't think it will make a significant difference to you over the next 2 years as it will be bringing down the whole amount owed prior to renewal.  

I would definitely rather reduce the term than reduce my payments.

Hoenir

The mortgage term is contractual. To shorten will require the lender to follow a full process. 

Making overpayments. while not officially shortening the term will give you flexibility in the future. In making overpayments the amount of interest you pay will reduce.  

Edi81

You can do it all through the app. 

Carl2510

Edi81 said:

You can do it all through the app. 

Hi Edi,

so if I go in the app and select a one time overpayment of 10% which I’m now figuring out as what the balance was at the 1st of January.

that will obviously reduce my balance but not my term?

would I reduce my term when I go to remortgage then?

Thanks.

Bigphil1474

When you re-mortgage, you can choose your repayment period same as getting a new mortgage. I'd double check if you can pay off a lump sum and overpay - will depend on the Ts&CS.

RelievedSheff

You can do it all in the app. No need to call them.

Your account will tell you the amount you are allowed to overpay and the amount of any remaining overpayment allowance. It will reset on 1st January.

When you have made your overpayments the remaining term in the app will not change. It shows your contracted period only. Ours is still showing 12 years 5 months despite us overpaying £406 a month. The actual term remaining taking account of the overpayments is 9 years 8 months.

Andreg

I don't know what your mortgage rate is, but if you're on a fixed rate its likely to be less than what you could earn from a savings account, so you'd be better off saving the money for a couple of years then paying the mortgage down just before the renewal date.

Carl2510

Andreg said:

I don't know what your mortgage rate is, but if you're on a fixed rate its likely to be less than what you could earn from a savings account, so you'd be better off saving the money for a couple of years then paying the mortgage down just before the renewal date.

1.94.

I am currently looking at putting money into savings too. 

But my thought process is the more I pay off now the more interest I would save in the long run? Or am I thinking that all wrong.

my aim is to get it down to below £150K before my mortgage renewal is up.

Carl2510

RelievedSheff said:

You can do it all in the app. No need to call them.

Your account will tell you the amount you are allowed to overpay and the amount of any remaining overpayment allowance. It will reset on 1st January.

When you have made your overpayments the remaining term in the app will not change. It shows your contracted period only. Ours is still showing 12 years 5 months despite us overpaying £406 a month. The actual term remaining taking account of the overpayments is 9 years 8 months.

Hi,

thanks for this info very helpful.