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Original poster

PLEASE HELP

12 replies

Drlovestrong · 21/04/2023 13:43

hello
Please could someone kindly explain this to me.... I have a mortgage and I was just about to increase my monthly payment (overpay) thinking this is the best way to reduce the term of the mortgage and as I am on the website filling in the details I read this:

Please note that overpayment will not reduce your contractual mortgage term.

Im sorry to be stupid but wtf???!! I thought if I overpaid on my mortgage it would mean the mortgage would end sooner....when I've been onto the banks overpayment calculator it shows how many years I can reduce my mortgage term by paying overpaying different monthly amounts of lump sums! I am so confused. My mortgage ends in 27 years and I was thinking if I overpay I can reduce it. Please can someone smart explain why my term won't reduce and what's the point in overpaying if I'm tied into this for 27 years....any advice appreciated 🙏

OP posts:
PatriciaHolm · 21/04/2023 13:48

The length of your mortgage term is technically a contractual thing, you cannot change the length without renegotiating the mortgage. It also gives you scope, if you need, to reduce your payments in the future if you need to at some point.

In the event of you paying your entire mortgage off earlier, that would of course end your obligations. It's just that the contract itself still exists as a legal entity until total repayment, it can't be changed as a legal contract just by overpaying.

NoSquirrels · 21/04/2023 13:51

Are you on a fixed rate for a period of time?

If, say, you’re tied into a fixed rate for 3 years, and you make overpayments, when you next come to remortgage you can shorten the term then. So say you are 27 years now, and in 3 years time it should be 24 years, but now because you owe less you can afford to shorten the term to 20 years when you remortgage.

Youcancallmeirrelevant · 21/04/2023 13:51

You can overpay then when you come to the end of your current fixed deal, you pick a new product from the bank with a shorter term, and new monthly payments. It just means right now on your current product overpaying won't reduce the term

Original poster
Drlovestrong · 21/04/2023 13:55

Brilliant thank you lovely wise mumsnetters. I am on a fixed 5 year deal but I will definitely look to overpay every month between now and then and when it ends renegotiate the term length.

REALLY APPRECIATE YOUR SWIFT RESPONSES. have a great day lovely people 🤗

OP posts:
Fizzadora · 21/04/2023 13:59

Please make sure there are no penalties for overpaying. We were not allowed to overpay for the first 5 years of a 10 year fixed deal and then limited to 10% overpayments for the last 5 years.

Original poster
Drlovestrong · 21/04/2023 14:00

Fizzadora · 21/04/2023 13:59

Please make sure there are no penalties for overpaying. We were not allowed to overpay for the first 5 years of a 10 year fixed deal and then limited to 10% overpayments for the last 5 years.

Thank you. I can pay up to 10 percent of the outstanding mortgage annually without incurring any charges.

OP posts:
BarbaraofSeville · 21/04/2023 14:38

What's your interest rate? There's many people who fixed a year or two who will be paying around 1% interest so it would be silly to overpay as you can just save the money and get up to about 7% savings interest, depending on what type of account you choose.

But your mortgage term isn't a particular concern if you intend to regularly overpay. You just send money to it until you don't owe any more money. Then you can stop paying.

If it says overpayments don't reduce the term, your lender will automatically reduce your monthly payments each time you overpay, to keep the term the same. If you want to pay more, you can just make a bigger overpayment.

Original poster
Drlovestrong · 21/04/2023 14:42

BarbaraofSeville · 21/04/2023 14:38

What's your interest rate? There's many people who fixed a year or two who will be paying around 1% interest so it would be silly to overpay as you can just save the money and get up to about 7% savings interest, depending on what type of account you choose.

But your mortgage term isn't a particular concern if you intend to regularly overpay. You just send money to it until you don't owe any more money. Then you can stop paying.

If it says overpayments don't reduce the term, your lender will automatically reduce your monthly payments each time you overpay, to keep the term the same. If you want to pay more, you can just make a bigger overpayment.

3.25%

Really a savings account with 7 percent interest?! Googling now....

OP posts:
Linnty · 21/04/2023 20:32

You can open a first direct current account and use it as a vehicle to do a standing order to their linked 7% regular saver. You can save upto £300 per month in it.

Original poster
Drlovestrong · 22/04/2023 07:20

Linnty · 21/04/2023 20:32

You can open a first direct current account and use it as a vehicle to do a standing order to their linked 7% regular saver. You can save upto £300 per month in it.

Thank you will look into this

OP posts:
Phineyj · 22/04/2023 07:55

This thread has helped me too, thanks OP!

Original poster
Drlovestrong · 22/04/2023 09:01

Phineyj · 22/04/2023 07:55

This thread has helped me too, thanks OP!

Glad to hear it!

OP posts:
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