we were on a fixed rate for two years, this came to an end in June. We went to see our mortgage advisor to discuss our options and the most sensible one was just to let it revert to their standard variable rate. We're now paying about a £150 less a month than we were, so we can afford to pay this extra off the mortgage every month.
I have no paperwork to read up on caps/penalties for overpayment. I phoned the bank this morning and she said they won't send paperwork as it's a 'continuation of your mortgage offer' - but that paperwork only gives caps/penalties for the fixed rate mortage and not the variable that we've now switched to.
She told me over the phone that there is no cap or penalty. I can pay off as much extra as I want.
I've had my fingers burnt before by being told something over the phone that turned out not to be true.
Does anyone here know if this is right? Currently we have extra at the end of the month which i've been putting into savings, but it would make more sense to pay it off the mortgage (which we'd like to clear asap so DH can give up commuting and find work closer to home)
I don't think anyone will be able to help you as surely it would be unique to your mortage and terms. However, in my situation I am able to overpay as much as I like but will incurr a penalty of about £4000 if I pay off my mortage before 2017.
thanks all, you've confirmed what I thought really. The info I was given over the phone may be correct. I am a little bit that all we got was a letter saying we'd reverted to the variable and no paperwork to explain the T&C's that apply. I have all the paperwork from the original mortgage and there is nothing in there about what happens now. It is just about the caps and penalties for the fixed rate. I'm not going to take the word of a call centre operative. I'll see if they will send me the relevant paperwork and also get an appt with our mortgage advisor to double check this and get some confirmation in writing.
Generally speaking (but DO clarify with your lender), if you revert to standard variable rate, then you are not tied in with penalties for early / over repayments so you can, and should, overpay as much as you want. Overpayment and early repayment penalties are usually only applied to mortgages with specific terms e.g. fixed rate, to stop you paying it all off and getting a mortgage elsewhere if the variable rate falls and you are stuck on a high fixed rate.
I was in this situation in May this year and found all the details of terms and conditions of the mortgage switching to Standard Variable rate in the original mortgage offer. If you really don't have it you can ask the mortgage company to provide you with a copy of the original document which they may do.
Incidentally, depending on how good your current deal is you may be better off saving - our mortgage rate is currently lower than i can get for an instant access cash ISA, so I am choosing not to make overpayments at the moment.
Your mortgage terms and conditions would be bespoke to the lender. Some mortgage lenders at one point were enforcing early repayment charges longer than the fixed rate term at one point (fixed rate 3 years/erc 5 years for example). However, most were not.
I have just come to the end of a fixed rate with HSBC. During the fixed rate with HSBC I was able to overpay 10% per annum without penalty. Now I am able to overpay however much I want with a £25 penalty if my overpayment discharges the mortgage.
If your mortgage companies calls are recorded and they told you emphatically that you will not be charged for overpayment I would say you are safe to overpay because if you did start incurring charges you could challenge them on this.
Mine has just come off of the fixed term too - the bank have told me two very different things re what has to happen now. The woman who initially rang me clearly didn't have any idea what she was talking about - it's scary really how ill informed she was.
Now it's the 'To Fix' or 'Not to Fix' dilemma, Tracker, SVR, FR - arghhhhhhhhh
My husband is a geek. He reads the notes of the meeting of the bank of ENgland each month to see how the men on the committee have voted - to see how likely he thinks it is rates will go up. There are 9 members of the committee - in September all of them voted to keep the rates at 0.5%. http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2011/index.htm For the last 2 months they have all agreed to keep rates the same. Before that there was a minority of one or two wanting them to increase.