Mortgage Overpayments

[George Hincapie]

Does anyone know if you need permission to make overpayments, or can you just do it? Or is it bank dependant?

 

[vanandjuanunited]

Depends on the mortgage usually. Will also tell you if there is a max amount etc

 

[Minstadave]

Its dependant on your mortgage, surely they're the people to ask?

 

[George Hincapie]

Its dependant on your mortgage, surely they're the people to ask?

And I will. Tomorrow. When they are open. In the interim, I thought I'd ask here

HSBC BTW - just in case any of you other HSBC customers are already doing so.

 

[Ian_Eb]

We just left our standing orders the same when they dropped the rates. We probably pay around 30% more each month than we need to. Alliance & Leicester were fine with it and it just keeps taking time off the term of the loan.

 

[Participant]

There's a statutory maximum that you can repay from your mortgage before the company can penalise you for early repayments. I believe it's 10% of the outstanding balance per annum. Up to this proportion, you do not need permission or agreement from anyone.

What we did was contact our mortgage company and they sent us a form requesting details of the overpayment, we completed this form and returned it, then TSB (C&G at the time) started taking the extra payment from the next DD date.

Obviously since it's 100% capital you're spending the overpayment on, it's highly worth doing.

 

[Freakbro]

Yes, when you are on a deal, like a fixed rate, you are generally limited to a 10% of capital remaining overpayment per year without incurring any penalties.

This is why I let my fixed deal lapse and am now just on SVR and can make unlimited overpayments

 

[Richie]

There's a statutory maximum that you can repay from your mortgage before the company can penalise you for early repayments. I believe it's 10% of the outstanding balance per annum. Up to this proportion, you do not need permission or agreement from anyone.

That is, of course, dependant on the lender. I can make any amount of repayment that I want without penalty.

 

[alx]

Make sure to check if HSBC will be reducing the repayments or the term when you overpay. To minimise interest you'll want them to reduce the term not the monthly repayments but you may have to ask them to do this each time you overpay (Barclays are like this and tend to reduce the repayments by default).

 

[Participant]

That is, of course, dependant on the lender. I can make any amount of repayment that I want without penalty.

I thought every lender was obliged to allow overpayments up to a certain amount (10%?).

Obviously some lenders will allow more / unlimited overpayments, but I was referring to a statutory maximum that OP is guaranteed to be able to take advantage of.

Anyway I guess he's called his lender by now and cleared everything up .

To minimise interest you'll want them to reduce the term not the monthly repayments but you may have to ask them to do this each time you overpay (Barclays are like this and tend to reduce the repayments by default).

They make this a painful process unfortunately, making you go through a rigmarole with one of their 'mortgage advisors' to check that it's the best thing for you. While the FCA is obviously a good thing in general, I can't stand this nanny state culture it's fostering, making the assumption that because most are too idiotic to make their own sound financial decisions then so are you.

Overpaying and reducing the repayments is la-de-da, but overpaying and afterwards reverting to the same monthly payments that you were always on and that they originally agreed that you can afford when they processed the original application, is suddenly a problem. Hurumph.

 

[NoNameNoNumber]

I've been wondering whether to over pay my mortgage or put avc's into my pension... Decided I'm gonna get a valuation on my house once I've finished the work and see if its worth enough to remortgage and buy another house.

 

[George Hincapie]

Done. We can overpay up to 20% but we have gone for 10% for now.