Why is'nt my mortgage term falling?

itsnotfair_2

I paid some lump sums off my mortgage just over a year ago. Bringing it down to just 17,000. I started over paying by over £150 per month. They then said I would be finished in 5 years. Now a year on, still paying overpaying by £150 they tell me I still have 5 years to go
Looking at success stories on here I wonder what I'm doing wrong, I at least expected to have 4 years left by now.
Any body got any ideas

dasherman

Interest rises perhaps?

Hawksmuir

Looks like your lender is using your overpayments to reduce your borrowings rather than the term (e.g. you now owe £20K instead of £30K but still payable over 5 years)

Give them a call and ask that they use the overpayments to reduce the term.

Trying_to_be_good

When you overpay, your lender can apply the overpayment in one of two ways:

1. Reduce the term of the mortgage, whilst keeping the minimum monthly payments the same; or
2. Reduce the minimum monthly payment, whilst keeping the term the same.

You need to check which they have done. The term may have fallen from 5 years 11 months to 5 years 0 months - try to get a more accurate figure for the term remaining, and check whether the minimum monthly payment has reduced.

robnye

Trying_to_be_good wrote: »

When you overpay, your lender can apply the overpayment in one of two ways:

1. Reduce the term of the mortgage, whilst keeping the minimum monthly payments the same; or
2. Reduce the minimum monthly payment, whilst keeping the term the same.

You need to check which they have done. The term may have fallen from 5 years 11 months to 5 years 0 months - try to get a more accurate figure for the term remaining, and check whether the minimum monthly payment has reduced.

ya beat me to it..... (and worded it better than me)

Trying_to_be_good

robnye wrote: »

ya beat me to it..... (and worded it better than me)

My New Year's Resolution was to use better grammar when posting!

I only wish I could make my banana dance like yours!

robnye

Trying_to_be_good wrote: »

My New Year's Resolution was to use better grammar when posting!

I only wish I could make my banana dance like yours!

red bull........! :rotfl:

itsnotfair_2

Thanks for all the advice. I know it sounds dumb but which is best lower amount or shorter term. I thought by over paying both would happen as interest is usually but on daily. It feels like 5 years is a long time to pay off a mere 17k.

Gorgeous_George

Overpaying by a small amount may not be applied to the account immediately (not worth the admin). However, overpaying WILL reduce the term.

As to which is better, that depends on lifestyle choices and interest/inflation rates.

GG

Trying_to_be_good

itsnotfair wrote: »

which is best lower amount or shorter term. I thought by over paying both would happen as interest is usually but on daily. It feels like 5 years is a long time to pay off a mere 17k.

Try and get the detailed info from your lender on the term and minimum monthly payment - if you were to repay £17k over five years with NO interest it would cost nearly £300 per month. I don't know what your interest rate is - at 6% monthly repayments would be around £330 by my calculation. If you're paying more than that, the term will be falling and you will, of course, be saving money in the long run as the total interest you pay will be less.

Remember, if they lower your monthly payments because you're overpaying, you need to 'up' you overpayments to keep the total amount you're paying off each month as high as possible.

robnye

if i make overpayments, the monthly payment is adjusted until the annual review, as for the reducition in terms this requires me contacting the mortgage company