Mortgage additional payment penalty

[Sunshineseabeach]

We would like to pay more into our mortgage but are on a fixed rate that ends this year so can only pay 10% or have to pay a penalty. Can we wait until this ends, go into a variable rate, pay extra without the penalty and then negotiate a fixed rate

I can’t see why not.

start looking for the best rates 6 months before the old one expires. Then when you remortgage pay off as much as you want, I.e. have a new lower loan amount on the new rate.

Yes.

If you know how much you want to overpay by and you're staying with your current lender you can normally get a new product put in place when the old one ends. The product illustration will detail that you are making a lump sum payment penalty free that doesn't affect your new 10% allowance.

Yes you can.

What is your current interest rate? If your mortgage ends this year, the rate is almost certainly lower than what you can get in savings, so it's likely to be advantageous to save all money you wish to use to overpay into a savings account, then you can transfer it to your mortgage after your fixed rate ends.

I am with Newcastle b/s. I had 7 days to make an overpayment at the very start of my new fixed rate last autumn. I assume most lenders have a similar arrangement.

Does your current deal allow monthly overpayments? Mine allows an extra £500 a month PLUS 10% lump sum. Worth a phone call.

As @Can2022getanyworse pointed out sometimes there is an amount over and above the 10% which can be repaid.
Barclays certainly have a "secret"
Overpayment amount .

Thank you. We are with Halifax and our current agreement only allows 10% maximum per year.

Shall we withdraw money from stock & share ISA to do the overpayment? This is not earning much at the moment

Yes of course, you'll get the end date of your fixed rate you can then get a new deal for the lower amount

Can you ask to reduce the term temporarily?

So, say your usual payment is £500 over 10 years of you reduced the term to 5 years your monthly payment would go up to £1000?

*very unlikely the figures work like that but you get the idea

@alwayscheery ‘secret amount’? Tell me more -please! We are with Barclays & I’m struggling to log online, DH is struggling to set up additional payments so is having to make separate payments instead of increasing the payment. No clue what the issue is with the online banking but where do we find the secret amount?

www.financial-ombudsman.org.uk/decision/DRN-3474055.pdf

I have a feeling you can pay 10% plus 3 times your normal
Mortgage payment I need to read the ombudsman letter above, once more but speak to Barclays and check.

Thanks, I think I need to read that a couple of times when I get a bit of quiet!

I used to work for Skipton building society and they would allow you to make an unlimited overpayment in the last month of your product once your last payment had been received