Beware of overpaying!

Dithering_Dad

Any payment I make comes straight off the mortgage capital. It just goes to show that, with any sort of financial investment, you have to make sure you have the right product for your requirements.

CLAPTON

aliasojo wrote: »

I have an ING mortgage too and I was told that 'capital' payments i.e payments that actually reduce the amount you owe do have £1000 minumim threshold. However, any overpayment less than £1000 that you make, sits alongside and offsets the interest in the meantime until it grows to be £1000.

So if I owe £10,000 and I over pay by £990 then I'm only paying interest on £9,010.

I made sure I clarified this, so if it's incorrect it's not because of my misunderstanding it's because I was given incorrect information. I'm a little concerned now as I do try to overpay when I can and if my information was wrong then I'm obviously being negatively affected by it. Unfortunately I was told several things that were incorrect when the mortgage was originally set up so it wouldn't surprise me if this were another.

I think a phone call to ING to clarify might be in order. :undecided


Edit: Phoned ING and what I was originally told is correct. Although you can't make a capital payment unless it's £1000 or more, any overpayment you do make offsets the interest owed. So you dont get interest paid on the overpayment but you dont get charged interest on that amount in your mortgage either. So overpay away, unless you have a savings account that pays a higher rate of interest than your mortgage costs....then you'd be better saving elsewhere and transferring once it reaches £1000 as said above.

as stated this doesn't make sense.

It seems that if you pay either more or less than 1000 you dont pay interest on that amount.... so from your point of view this is exactly the result you want... so taking it from the capital makes no sense...sometime they mean by taking it from the capital that they will recalculate the mortage over the original term and reduce your monthly payments (presumably something you wont want as you are presumably trying to clear the mortgage more quickly).

getmore4less

Be carefull you are not confusing taking money of the capital and recalcualting the payments.

A lot of mortgages will only charge interest on the outstanding ballances daily so any overpayment change the amount of interest you pay imediately and there is nothing to worry about.

Many don't however recalcualte the normal payment on every overpayment untill it reaches a certain amount or annualy to save on admin. so your normal payment becomes a part overpayment as well.