paid mortgage in advance - withdrawing overpayments?

Hello,

I've been reading this site for ages and have a problem that some users may be able to help me with.

I have a mortgage with my husband on our home (possibly in neg equity).

The arrangement was initially that it would be interest only for 5 years followed by 27 years repayment.

4 years ago we came into some money and paid a chunk off the mortgage.

We got a letter this morning saying that the interest only period had expired and we now had to switch to repayment.

Because we are far ahead of schedule with repayments we are trying to get them to either (ideally) refund the overpayment or (less ideal, but acceptable) leave us on interest only until the prepayment is "used up".

We were never told that the overpayment could not be withdrawn again and probably wouldn't have made it if we had known.

I am waiting for the bank to phone me back and wondering if there is anything else I should say to them?

Thanks for any advice.

We were never told that the overpayment could not be withdrawn again and probably wouldn't have made it if we had known.

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It would be generally known that when you pay down or pay off a loan, that you cannot just borrow it again. Mortgages are not overdrafts. If you read askaboutmoney, you will see many discussions on "Should I pay a lump sum off my mortgage?" and the answer will usually include a warning "Don't do so if you think that you need the money again in the near future"

So the bank has no case to answer here.

They are under no legal obligation to keep you on interest only, but you can always ask them to recognize that you did make a capital repayment. I doubt that they will agree as eaten bread is soon forgotten.

If you are having trouble meeting your repayments, you can invoke the MARP (Mortgage Arrears Resolution Process).

Thanks Brendan, that's pretty much what the bank said when they rang me back. I'm meeting them next week to ask for interest only for a year, hopefully that'll buy us some time.

I would have thought that the overpayment has therefore shortened the term ..but the deed and letter of offer would now have a different term. You could ask them to reinstate the original term and that payment. So dont take NO immediately. Small bit of maths for the bank. Current balance / interest rate / remaining term = revised payment

Thanks WizardDr, that seems to be what they're offering alright.

Meeting the guy on Monday to apply for a year's extension to the interest only.

Any tips?

TBH our situation is pretty bad at present so I reckon honesty is probably the best policy... it's not as though we have any spare money lying around.