Overpayment on mortgage- checks?

[Mel15sa]

Hiya,

does anyone overpay on their mortgage? We had saved a lump sum under the limit the mortgage company allow (under £11k), and also wanted to know if we need a solicitor to pay this or will the bank ask for checks to be done? On their website it says you just transfer your amount into their account with your mortgage number so they can match the payment.

Also if we sell our place, do we get that overpayment back, and will the solicitors ask to see all our mortgage payments?

Has anyone had issues with this or overpaying within their acceptable limit? I didn't know until now I could overpay, and my hubby was able to save his student loan (late studier) and wants to use that to make some over payments.

thanks x

We overpay. The bank doesn't do any checks and no solicitor needed. Usually I just phone the bank and they take the money out of the account I have with them.

When you sell you don't get the money back as such but you will owe less on the mortgage balance.

One thing to consider is you can either reduce the mortgage term (so same monthly payment amount for fewer years) or the balance (lower monthly payments for the number of years you took out the mortgage for).

No solicitor needed or anything, but why use the money from a student loan to pay off the mortgage?

We overpay, we just transfer the money straight to the mortgage account like a bank transfer, it doesn’t need to happen via a solicitor. It effectively comes off the end of your mortgage, so you pay the mortgage off in a shorter amount of time. If you move house before clearing your mortgage it just means you’ve got more equity in the property as you owe the bank less money.
However, looking up the internet rates of student loans quickly on your behalf, Martin Lewis says the rate is 8%, so unless your mortgage interest rate is more than 8% (which is very unlikely), it makes no financial sense to use a student loan to pay off a mortgage. The golden rule of paying off debt is that you pay off the debt with the highest interest rate first. Ironically, unless you’ve got credit card debt that isn’t on a zero rate this is likely to be student loans.

We overpay. The bank doesn't do any checks and no solicitor needed. Usually I just phone the bank and they take the money out of the account I have with them.

Same here, it’s just a bank transfer payment - nothing more than that.

As above.... I'd be looking at using the student loan to pay back the student loan instead! Or other loans that have high interest rates. It's likely your mortgage has a lower rate.

@TerroristToddler @RaRaTa @CheeseNPickle3 aahh we didn't consider that rate factor, yes the mortgage is 4.4%. Suppose we just thought it wasn't being used and perhaps in the long run it would be better to clear the morgage. Given us something to think about or try work out the mathss..or is it as simple as repay the student loan first!

Yep, it really is as simple as repay the student loan first, if this is the debt with the highest interest rate that you currently have!

Martin Lewis has lots about what to consider when thinking about making an overpayment. We make regular overpayments up to the 10% annual limit (Halifax). Annoyingly though, they keep reducing our monthly payments as a result, even though we’ve asked them not to.

we overpay when we get our bonus.
once we were asked for a declaration about the origin of the money (not uk).

Also if we sell our place, do we get that overpayment back no

I had the choice of reducing monthly payments or reducing the term of the mortgage, i knocked a few years off my mortgage - now mortgage free. Just did bank transfers when I had the funds available. You dont get money back as it reduces the amount you owe
On a fixed deal you normally have a maximum amount you can pay each year - usually 10% of the total

@cherrytree12345 So for example a simple example of selling only, we have 40K equity, and overpay buy 8k, and now have 48k equity. We make our normal payments of 400 a month for 6 months. If we sell later on, do we receive

1. 40k+(400x6) back, or
2. 40k + 8k + (400x6). So you say we get 1 back? x

you will get back equity minus fees.

however equity might be favourable due to reduced interest as result of overpayment.

put your numbers in a calculator.

You don't get anything back from the bank if you sell. Overpayments just pay down the capital sum faster, so you'd pay off the mortgage faster.

When you sell, the buyer pays the price for the house and from that price the solicitor pays off the remaining mortgage and then gives you the remainder that's left after (that's the "equity").

The only time it might be good to put student loan payments into a house is if the person with the loan is never going to hit the minimum threshold for repayment or not being much above it before the loan is cancelled.

E.g they will not be able to work full time due to caring responsibilities and/or disability

When you sell you will have more equity
so you get the money back from the people buying your house. So it rather depends on how much you paid vs how much you can sell it for. But it doesn’t disappear.

But just pay back the student loan, the interest on that is way higher than your mortgage.