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  • FIRST POST
    • katie4
    • By katie4 6th Mar 18, 11:47 AM
    • 144Posts
    • 43Thanks
    katie4
    Cannot overpay
    • #1
    • 6th Mar 18, 11:47 AM
    Cannot overpay 6th Mar 18 at 11:47 AM
    Hi
    i have enquired about overpaying on our mortgage and this was the reply based on your current product deal you cannot overpay but you can make capital payments of up to 10%PA which is 3 times monthly payment


    So as our fixed term is ending soon we're looking at reducing the term from 20 to 15 years as overpaying doesnt seem to be an option, and reducing to 15 years will result in us continuing to pay the same monthyl amount we currently do, i know if we kept it at 20 years the monthly amount would reduce but if we cant afford to overpay what theyve suggested it seems to make sense to change to 15 years, i think?


Page 1
    • zx81
    • By zx81 6th Mar 18, 11:49 AM
    • 17,284 Posts
    • 18,395 Thanks
    zx81
    • #2
    • 6th Mar 18, 11:49 AM
    • #2
    • 6th Mar 18, 11:49 AM
    i know if we kept it at 20 years the monthly amount would reduce but if we cant afford to overpay what theyve suggested it seems to make sense to change to 15 years, i think?

    Originally posted by katie4
    If you can't afford to overpay, I'd have thought leaving it at 20 years would be best, as 15 years will commit you to larger payments.
    • katie4
    • By katie4 6th Mar 18, 11:55 AM
    • 144 Posts
    • 43 Thanks
    katie4
    • #3
    • 6th Mar 18, 11:55 AM
    • #3
    • 6th Mar 18, 11:55 AM
    If you can't afford to overpay, I'd have thought leaving it at 20 years would be best, as 15 years will commit you to larger payments.
    Originally posted by zx81

    the payments dont change from what we're paying now
    we pay 360pm now and reducing term to 15 years as we're due to change our rate in the next few months is 368 whereas 20 years its 280
    it makes sense to me to keep paying roughly what we are now

    • getmore4less
    • By getmore4less 6th Mar 18, 12:12 PM
    • 32,192 Posts
    • 19,352 Thanks
    getmore4less
    • #4
    • 6th Mar 18, 12:12 PM
    • #4
    • 6th Mar 18, 12:12 PM
    Hi
    i have enquired about overpaying on our mortgage and this was the reply based on your current product deal you cannot overpay but you can make capital payments of up to 10%PA which is 3 times monthly payment


    So as our fixed term is ending soon we're looking at reducing the term from 20 to 15 years as overpaying doesnt seem to be an option, and reducing to 15 years will result in us continuing to pay the same monthyl amount we currently do, i know if we kept it at 20 years the monthly amount would reduce but if we cant afford to overpay what theyve suggested it seems to make sense to change to 15 years, i think?

    Originally posted by katie4
    That is overpaying

    not sure "which is 3 times monthly payment" means

    on a 100k over 20y would be between 500pm-700pm 10% would be 14-20 extra payments in the year.
    • katie4
    • By katie4 6th Mar 18, 1:00 PM
    • 144 Posts
    • 43 Thanks
    katie4
    • #5
    • 6th Mar 18, 1:00 PM
    • #5
    • 6th Mar 18, 1:00 PM
    That is overpaying

    not sure "which is 3 times monthly payment" means

    on a 100k over 20y would be between 500pm-700pm 10% would be 14-20 extra payments in the year.
    Originally posted by getmore4less
    Yes but we cannot afford 3x times our monthly payment so thought by keeping payments same as they are now and reducing the term it would be pretty much the same as overpaying

    • katie4
    • By katie4 6th Mar 18, 1:01 PM
    • 144 Posts
    • 43 Thanks
    katie4
    • #6
    • 6th Mar 18, 1:01 PM
    • #6
    • 6th Mar 18, 1:01 PM
    That is overpaying

    not sure "which is 3 times monthly payment" means

    on a 100k over 20y would be between 500pm-700pm 10% would be 14-20 extra payments in the year.
    Originally posted by getmore4less
    10% per annum is 3 times our monthly payment
    our monthly payment is 360 so we can overpay by 1080 or more but we cant afford that all in one go

    • zx81
    • By zx81 6th Mar 18, 1:02 PM
    • 17,284 Posts
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    zx81
    • #7
    • 6th Mar 18, 1:02 PM
    • #7
    • 6th Mar 18, 1:02 PM
    Yes but we cannot afford 3x times our monthly payment
    Originally posted by katie4
    You don't need to. The lender told you that you could make overpayments of UP TO 10%.
    • thriftylass
    • By thriftylass 6th Mar 18, 1:10 PM
    • 3,335 Posts
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    thriftylass
    • #8
    • 6th Mar 18, 1:10 PM
    • #8
    • 6th Mar 18, 1:10 PM
    How much could you afford to pay a month? Even just rounding it up to 400 or 500 a month would make a difference and is well within your banks limits.
    • katie4
    • By katie4 6th Mar 18, 1:17 PM
    • 144 Posts
    • 43 Thanks
    katie4
    • #9
    • 6th Mar 18, 1:17 PM
    • #9
    • 6th Mar 18, 1:17 PM
    You don't need to. The lender told you that you could make overpayments of UP TO 10%.
    Originally posted by zx81
    10% per annum is three times the monthly payment (1080 which we cant afford in one go)

    • Mahsroh
    • By Mahsroh 6th Mar 18, 1:20 PM
    • 339 Posts
    • 330 Thanks
    Mahsroh
    10% per annum is three times the monthly payment (1080 which we cant afford in one go)
    Originally posted by katie4
    Yes, but it's UP TO 10%. You don't have to pay an extra 1080 a month. You can overpay by 1 a month if you want to, but you can't pay more than 10% of the balance.
    • zx81
    • By zx81 6th Mar 18, 1:22 PM
    • 17,284 Posts
    • 18,395 Thanks
    zx81
    10% per annum is three times the monthly payment (1080 which we cant afford in one go)
    Originally posted by katie4
    Why are you taking an all or nothing approach to this?
    • katie4
    • By katie4 6th Mar 18, 1:32 PM
    • 144 Posts
    • 43 Thanks
    katie4
    Why are you taking an all or nothing approach to this?
    Originally posted by zx81
    i didn't read it correctly i read it as 10% not up to 10%
    doh!

    • katie4
    • By katie4 6th Mar 18, 1:34 PM
    • 144 Posts
    • 43 Thanks
    katie4
    what does it mean "you cannot overpay but you can make capital payments" ? whats the difference? thanks

    • Mahsroh
    • By Mahsroh 6th Mar 18, 1:54 PM
    • 339 Posts
    • 330 Thanks
    Mahsroh
    what does it mean "you cannot overpay but you can make capital payments" ? whats the difference? thanks
    Originally posted by katie4
    I was wondering that myself. Seems little difference to me. Only thing I can think of is they are saying you can't overpay meaning change your monthly DD to a higher amount, but you can make capital payments of up to 10% of the balance per annum (in the form of lump sum payments). I'm only speculating though. I'd ask your lender to clarify exactly what they mean.
    • thriftylass
    • By thriftylass 6th Mar 18, 2:11 PM
    • 3,335 Posts
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    thriftylass
    I was wondering that myself. Seems little difference to me. Only thing I can think of is they are saying you can't overpay meaning change your monthly DD to a higher amount, but you can make capital payments of up to 10% of the balance per annum (in the form of lump sum payments). I'm only speculating though. I'd ask your lender to clarify exactly what they mean.
    Originally posted by Mahsroh
    I think you're right. I wouldn't change our direct debit but make individual payments every month up to the amount I can afford. I.e DD is let's say 650 I make a capital repayment of 150 every month by transfer and remain way under the 10%. Basically 12 little "lump sum" payments.
    • Mahsroh
    • By Mahsroh 6th Mar 18, 2:19 PM
    • 339 Posts
    • 330 Thanks
    Mahsroh
    I think you're right. I wouldn't change our direct debit but make individual payments every month up to the amount I can afford. I.e DD is let's say 650 I make a capital repayment of 150 every month by transfer and remain way under the 10%. Basically 12 little "lump sum" payments.
    Originally posted by thriftylass
    I do the same. I have my DD going out then a further standing order each month as an overpayment. Though that's my choice - the lender will let me do it either way..... but then I am on a tracker so restrictions on my mortgage with regard to overpayments.
    • wantonnoodle
    • By wantonnoodle 6th Mar 18, 4:31 PM
    • 251 Posts
    • 171 Thanks
    wantonnoodle
    We have a DD going out, then a further standing order too.

    Our extra payment does not affect the monthly DD amount (I know some lenders do), instead it will ultimately reduce the term. We can overpay by up to 1000 per calendar month without tripping ERCs (we're on a discounted variable rate).

    OP, I would suggest you confirm with your lender if you pay lump sums toward the capital, will it reduce your DD payment or will it reduce the term? If the DD payment is what gets reduced, it can prove tricky to manage, as your additional payment then has to increase monthly to offset the decrease in DD, or you lose the benefit. Try and get it to reduce the term if you can, as it will stabilise your monthly payments and you can then just leave it ticking over in the background once set up.
    • Thrugelmir
    • By Thrugelmir 6th Mar 18, 5:13 PM
    • 58,964 Posts
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    Thrugelmir
    what does it mean "you cannot overpay but you can make capital payments" ? whats the difference? thanks
    Originally posted by katie4
    Who is your lender?
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • katie4
    • By katie4 6th Mar 18, 7:16 PM
    • 144 Posts
    • 43 Thanks
    katie4
    Who is your lender?
    Originally posted by Thrugelmir
    Monmouthshire building society

    • getmore4less
    • By getmore4less 6th Mar 18, 8:36 PM
    • 32,192 Posts
    • 19,352 Thanks
    getmore4less
    From a 2y fix description

    Regular overpayments are not permitted during the first 2 years from completion. Regular overpayments are amounts collected with, and in addition to, your monthly mortgage payments. You may make capital repayments of up to 10% of the original loan amount in each of the first 2 years without an early repayment charge. However, during the first 2 years any additional amount repaid above the 10% permitted will be subject to an Early Repayment Charge of 2% of the amount repaid in years 1 & 2. Following receipt of a lump sum payment, the amount that you owe, and so the amount of interest you pay, is reduced immediately
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