Lump Sum Payment and Mortgage Maturity Date Query

Hi,

Please move if in the wrong section.

We recently paid a lump sum off our mortgage.

In relation to this, I requested we continue to pay our current balance and requested that the term be reduced.

On this, the bank have advised me that the Mortgage maturity date remains the same today and will only be reduced when our fixed term with them expires.

Can I ask does this have any implication to interest payments on the mortgage? It may be a silly question but just wanted to know as they were adamant my expiry date does not change post payment.

Feedback appreciated and thanks,

Did they say that to you in writing?

It doesn't make a lot of sense.

However, your interest will reduce immediately.

Your loan will be finished earlier.

I presume that they mean that for some admin reasons, the original maturity date stays the same.

Which lender? Is it permanent tsb by any chance?

Brendan

Thanks for the feedback Brendan,

They sent me a letter with the maturity date remaining as is.

I called and queried why the date did not reduce and they stated that the term will not reduce until my fixed term ends with the bank (BOI).

They stated I could reduce my term however they required a letter in writing asking me to request this.

Last thing to note: My interest rate remains as is as its a fixed mortgage.

I am assuming I have maybe missed something here but thought this would reduce if I continued to make the same contribution after paying the lump sum payment.

mimes said:

thing to note: My interest rate remains as is as its a fixed mortgage.

I am assuming I have maybe missed something here but thought this would reduce if I continued to may the same contribution after the lump sum payment.

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The interest rate remains the same.
The interest charge will reduce as the balance has reduced.

mimes said:

They stated I could reduce my term however they required a letter in writing asking me to request this.

Click to expand...

It's needed in writing because you are making a permanent contract change.
If you get into repayment difficulties later, it won't be automatically extended back to the original date.

So you are currently on a fixed rate for a certain length of time. I believe they won't allow overpayments in this case. Once that term is up you move to a variable rate which allows overpayments and your wishes will be granted at that point.

I paid the overpayment and a penalty just as an FYI.

elcato said:

I believe they won't allow overpayments in this case.

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Just be careful with language here.
By law every lender must allow overpayment regardless of whether there's a fixed rate or not. But the lender is entitled to compensation for their financial loss (a break fee) unless you've a contractual right to overpay without a break fee.