overpaying mortgage

[mayfield05]

My husband rang my mortgage lender last week to go thorugh in detail the status of our mortgage as we are thinking of moving. We have overpaid on the mortgage for over a year now by €750 pm. We assumed that as this money was directed in the the mortgage account number that it would be allocated to the account however, our mortgage lender has told us that it wasn't, in fact it has been sitting in an overpayment account and has not reduced the capital. I'm really annoyed about this as we've paid interest that we shouldn't have and I assume the bank has earned interest on our money as well. Is this normal practise. Any advice as to what I should do. In the process of writing a letter to them to explain. Any advice would be greatly appreciated.

 

[Sunny]

My husband rang my mortgage lender last week to go thorugh in detail the status of our mortgage as we are thinking of moving. We have overpaid on the mortgage for over a year now by €750 pm. We assumed that as this money was directed in the the mortgage account number that it would be allocated to the account however, our mortgage lender has told us that it wasn't, in fact it has been sitting in an overpayment account and has not reduced the capital. I'm really annoyed about this as we've paid interest that we shouldn't have and I assume the bank has earned interest on our money as well. Is this normal practise. Any advice as to what I should do. In the process of writing a letter to them to explain. Any advice would be greatly appreciated.

Its common enough practice. Did you put your instructions in writing and get confirmation that the overpayments would be used to reduce the capital outstanding.

 

[ClubMan]

We have overpaid on the mortgage for over a year now by €750 pm. We assumed that as this money was directed in the the mortgage account number that it would be allocated to the account however, our mortgage lender has told us that it wasn't, in fact it has been sitting in an overpayment account and has not reduced the capital. I'm really annoyed about this as we've paid interest that we shouldn't have and I assume the bank has earned interest on our money as well. Is this normal practise.

It's common. This issue has arisen several times recently. If you want to make accelerated lump sum or regular capital repayments then you simply must make arrangements (preferably in writing and acknowledge in writing) with your lender for overpayments to be paid off the capital balance if you want things to go smoothly. Your loan terms & conditions may cover this. You could try querying/complaining about this with the lender and see if they can do anything. If not you could, once you have exhausted the lender's complaints process and obtained a "final response" letter, take the issue to the [broken link removed] but I doubt that they would find in your favour.

Post crossed with Camry's and Sunny's.

 

[mayfield05]

Thanks very much for the advice everyone - its most appreciated. I'm going to send a letter of complaint as when I enquired about overpaying it was over the phone. I was never told it wouldn't come off the capital but was told what to do. Thanks again

 

[ClubMan]

Did they lead you to believe that any additional payments over and above the normally agreed/scheduled repayments would be used to chip away at the outstanding capital balance? If so then you should certainly complain. Keep us posted.