Overpayments & Remaining Balance with First Direct.

LULULU1

We are about to remorgage with First Direct and have been offered 3.94% on a 5 year fixed and we would like this over 10 years.

On their web site it say" Know with your first direct mortgage you can make unlimited overpayments towards your borrowing - but you might have an Early Repayment Charge if you repay your whole mortgage during the fixed rate period"

So is it possible to repay the mortgage down to say £100 with 3 years remaining and not make any further payments until the end of the mortgage period and avoid an early repayment charge.

Also how does interest work with overpayment. Does it just reduce the interest you pay each moth with an over payment as your balance is lower.?

Many thanks for any help...

Brie

Mortgages work on the idea that you will be paying a bit every month.  So on that basis I wouldn't expect them to allow you to not make any payments over the last 3 years when there is still a balance owing.  

Yes - the more you over pay the less interest will be charged.  So if you start with a mortgage of £100k you'll pay interest based on that amount.  If you pay £1k a month the principle reduces and so your interest payments go down and with each consecutive payment you are paying more principle and less interest.  

What you need to check is what happens with your direct debits.  Some mortgage companies will reduce your DD when you over pay.  Others will reduce the length of the mortgage but leave the DD the same.

So if you got your mortgage down to £100 with 3 years still to run you'll likely have a DD of a couple of £ so you reach zero at the last month.  

born_again

Overpayment goes towards outstanding balance at that point.
Which of course reduces the daily interest on the balance left.

As to non payment as suggested. One to talk to their mortgage team about. 

eschaton

If you mean the admin fee to close the mortgage early, check to see if applies if you pay it off rather than remortgaging elsewhere. 

I paid my First Active mortgage off two weeks ago, 5 years and 9 months early. An RBS company. 

Every annual statement says that £225 is payable if repaid early so I expected to pay it. 

I had estimated my balance to within £36 so asked if the £225 was included. The guy just said they don’t charge it. I didn’t push him any further as you’d expect. I thought it might be because I’d paid it off and not remortgaged elsewhere. 

Letter arrived today confirming repayment of mortgage so that was £225 saved. 

Archerychick

LULULU1 said:

We are about to remorgage with First Direct and have been offered 3.94% on a 5 year fixed and we would like this over 10 years.

On their web site it say" Know with your first direct mortgage you can make unlimited overpayments towards your borrowing - but you might have an Early Repayment Charge if you repay your whole mortgage during the fixed rate period"

So is it possible to repay the mortgage down to say £100 with 3 years remaining and not make any further payments until the end of the mortgage period and avoid an early repayment charge.

Also how does interest work with overpayment. Does it just reduce the interest you pay each moth with an over payment as your balance is lower.?

Many thanks for any help...

I am with First direct and it’s actually quite good. I’m on a fix until October 2025, and I was concerned about paying it off too soon as getting a charge. They have explained that what I can do is pay as I normally am, and when the balance gets much lower, give them a call and they’ll recalculate the amount remaining across the remaining term. So you won’t be able to not pay for a period of time, but you’d be able to reduce the amount you repaid at the end