Overpaying mortgage

[Maryann1975]

We have a repayment mortgage with rbs. We are in a position to overpay each month but can only repay 10% each year. The paperwork isn’t clear though, is it 10% of what we owe at the end of each year (this is what I’ve been working too) or is it 10% of what we borrowed originally?

It’s only just becoming an issue now as we will be nearing the limit of the 10% of what we owed at the start of the year and don’t want to be charged.
I appreciate I could phone them up, but each time I think about it, they are closed.

I’m RBS too - my understanding is it is 10% of the outstanding balance on the anniversary of your mortgage.

Thank you. That was my original understanding of the clause, so will go with that.

Yes, it relates to the outstanding balance in the mortgage year. If you owe £100k you can overpay up to £10k

Can you not send them an email seeking clarity?

Horse's mouth and all that...

I would ask for definitive confurmation. Ours can also be overpaid by 10% but it's based on the original value of the loan, not the outstanding balance (not that we are ever in a position to overpay more than £50 here and there).

As above but also be careful when over paying. Im with natwest and found out that if i paid more that £999 it reduced my monthly payment. I was in a position to pay my 10% but i did not want my monthly payment to reduce, after speaking to lots of advisors one of them finally explained that i could space my payment out but dont pay over £999 above.

Check , mine is with nationwide and it’s 10% of the original morgage.

@Drivingbuttercup you just need to ask for the payments to reduce capital not monthly amounts.

I asked them to reduce capital and not monthly payments but was told it was not possible. Had to then stop my payment and had to get a refund as i had done it online. Made the same payment again in 999 deposits. Told advisor how silly their rule was but she said there was nothing she could do.

What a ridiculous system , with Nationwide I just phoned them up. I can over pay 10% of the original mortgage amount each year. Anymore and the fee reduces a percentage each year so 5% in year one to 1% in year five.

We are with First Direct, we owe a remaining £15k on a small mortgage (once the first one was gone) for the kitchen and the bathroom.

We have three years to go, we could pay it all off tomorrow from savings but there would be an early redemption fee in the thousands, equally we could pay most of it all off and leave us with repayments of £10 a month for the remainder of the mortgage. When this is all over and we feel a bit more confident in the markets, we will reduce it to practically nothing and use the money on paint and paper so it is fit for retirement.

I highly recommend First Direct.

As above but also be careful when over paying. Im with natwest and found out that if i paid more that £999 it reduced my monthly payment. I was in a position to pay my 10% but i did not want my monthly payment to reduce, after speaking to lots of advisors one of them finally explained that i could space my payment out but dont pay over £999 above.

Drivingbuttercup - I think you are confusing them. If you pay off 10% that should reduce your capital and therefore your ongoing repayments. if you leave your ongoing repayments at the same level, you will be overpaying again which would put you over the maximum 10% allowed.