Lump Sum Payment Interview

nobby113

Hi all. I have a mortgage with the Co-Op Bank. I want to make a fairly significant lump sum payment to reduce the capital. Co-Op are telling me I need to have a 2 1/2 hour interview with a Mortgage Advisor! Is this normal and is there anything I need to be wary of? Thanks v much.

tacpot12

I don't see how they can make you attend such an interview unless your contract requires you to so (The contract won't specify the time that such an interview will take). They might feel that they need to give you advice about the effect of the payment for regulatory reasons, but it's much more likely they just want to see you to try to sell you something. 

I think I would just make the payment to your usual payment details, and them call them up to tell them that you have made an overpayment and tell them whether you want to reduce your mortgage payment or not. (If you want to keep your mortgage term the same as it is currently, your mortgage payment will normally reduce. If you keep the mortgage payment the same, the term of the mortgage will reduce. Reducing the term will save you money, so I would recommend leaving the payments at the same level unless your intention in making the capital payment is reduce your mortgage payments).

BarelySentientAI

tacpot12 said:

I don't see how they can make you attend such an interview unless your contract requires you to so (The contract won't specify the time that such an interview will take). They might feel that they need to give you advice about the effect of the payment for regulatory reasons, but it's much more likely they just want to see you to try to sell you something. 

I think I would just make the payment to your usual payment details, and them call them up to tell them that you have made an overpayment and tell them whether you want to reduce your mortgage payment or not. (If you want to keep your mortgage term the same as it is currently, your mortgage payment will normally reduce. If you keep the mortgage payment the same, the term of the mortgage will reduce. Reducing the term will save you money, so I would recommend leaving the payments at the same level unless your intention in making the capital payment is reduce your mortgage payments).

Deciding to reduce the term of the mortgage is a modification of the contract.  You can't just "tell them" that you are unilaterally changing the contract.  Hence the meeting. 

BikingBud

BarelySentientAI said:

tacpot12 said:

I don't see how they can make you attend such an interview unless your contract requires you to so (The contract won't specify the time that such an interview will take). They might feel that they need to give you advice about the effect of the payment for regulatory reasons, but it's much more likely they just want to see you to try to sell you something. 

I think I would just make the payment to your usual payment details, and them call them up to tell them that you have made an overpayment and tell them whether you want to reduce your mortgage payment or not. (If you want to keep your mortgage term the same as it is currently, your mortgage payment will normally reduce. If you keep the mortgage payment the same, the term of the mortgage will reduce. Reducing the term will save you money, so I would recommend leaving the payments at the same level unless your intention in making the capital payment is reduce your mortgage payments).

Deciding to reduce the term of the mortgage is a modification of the contract.  You can't just "tell them" that you are unilaterally changing the contract.  Hence the meeting. 

We don't know that from the information the OP has provided, we don't know what type of mortgage they may have and what limitations there might be.

Perhaps @nobby113 could ask their lender for an agenda for the meeting and clarification of the lender's justification for an extensive discussion.

nobby113

BikingBud said:

BarelySentientAI said:

tacpot12 said:

I don't see how they can make you attend such an interview unless your contract requires you to so (The contract won't specify the time that such an interview will take). They might feel that they need to give you advice about the effect of the payment for regulatory reasons, but it's much more likely they just want to see you to try to sell you something. 

I think I would just make the payment to your usual payment details, and them call them up to tell them that you have made an overpayment and tell them whether you want to reduce your mortgage payment or not. (If you want to keep your mortgage term the same as it is currently, your mortgage payment will normally reduce. If you keep the mortgage payment the same, the term of the mortgage will reduce. Reducing the term will save you money, so I would recommend leaving the payments at the same level unless your intention in making the capital payment is reduce your mortgage payments).

Deciding to reduce the term of the mortgage is a modification of the contract.  You can't just "tell them" that you are unilaterally changing the contract.  Hence the meeting. 

We don't know that from the information the OP has provided, we don't know what type of mortgage they may have and what limitations there might be.

Perhaps @nobby113 could ask their lender for an agenda for the meeting and clarification of the lender's justification for an extensive discussion.

It's a 3 year fixed with a 10% limit on repayments. There's a 3% ERC this year falling to 2% and 1% for the next couple of years. I've had this type of mortgage before and made overpayments without a grilling. Just seemed odd.

BarelySentientAI

BikingBud said:

BarelySentientAI said:

tacpot12 said:

I don't see how they can make you attend such an interview unless your contract requires you to so (The contract won't specify the time that such an interview will take). They might feel that they need to give you advice about the effect of the payment for regulatory reasons, but it's much more likely they just want to see you to try to sell you something. 

I think I would just make the payment to your usual payment details, and them call them up to tell them that you have made an overpayment and tell them whether you want to reduce your mortgage payment or not. (If you want to keep your mortgage term the same as it is currently, your mortgage payment will normally reduce. If you keep the mortgage payment the same, the term of the mortgage will reduce. Reducing the term will save you money, so I would recommend leaving the payments at the same level unless your intention in making the capital payment is reduce your mortgage payments).

Deciding to reduce the term of the mortgage is a modification of the contract.  You can't just "tell them" that you are unilaterally changing the contract.  Hence the meeting. 

We don't know that from the information the OP has provided, we don't know what type of mortgage they may have and what limitations there might be.

From the co-op T&Cs and FAQs.  Yes, the ones that apply to the OP's mortgage.

They're probably assuming that making a "fairly significant lump sum" overpayment is likely to have this request following it - so getting ahead of the game by arranging an appointment.

nobby113 said:

I've had this type of mortgage before and made overpayments without a grilling. Just seemed odd.

It comes from the affordability guidance that came in at the mortgage 'crisis' a few years ago.  They have to be able to demonstrate (if challenged by the regulator, or if you later come and try to claim mis-selling) that you can afford payments over the new (shorter) mortgage term if the interest rates went up (like if you went onto SVR) and that they have explained this to you.  I agree it seems odd that they don't have to do it at a rate switch, only when it's a "change to the contract", but that's the way it is accepted to work. 

Basically backside-covering for them after scandals in the industry in the past.  They didn't used to have to be quite so bureaucratic about it before, which is why it might not have happened last time

It's this backside covering and tighter affordability that has left some people stuck on really high interest rates because somehow the system determines that might not be able to afford payments lower than they have at the moment just because the rates might go up to what they are already paying.

CSL0183

A fairly significant overpayment would suggest breaching the 10% limit perhaps?

They also need to check where the source of the significant overpayment is coming from to keep them satisfied there is no money laundering / drug dealing, proceed of crime concerns. 

amnblog

Being their usual painful selves.

Just ask them to advise you how to make the overpayment, other than that, thanks, but no thanks.