If you’ve made overpayments, you have the option to reduce your monthly payment by underpaying. We’d agree this with you as an arrangement and whilst this is in place, we’d collect a reduced amount from you.
Things you should consider before asking to underpay
- Paying less than your normal monthly payment means you will pay more interest over your mortgage term. If you’re still able to make your mortgage payments, then you should continue to do so.
- Your normal monthly payment may change whilst the arrangement is in place, for example if there’s a change in your interest rate. If this happens, we’ll write to you to let you know.
- You can cancel the underpayment arrangement at any time. For example, if your circumstances change and you can afford to make your full payments. This means you’ll pay less interest over the long term.
Mr & Mrs A have a repayment mortgage…
- There’s 10 years remaining on the term.
- They currently owe £80,000
- They’ve previously overpaid by £1,545
- Their monthly payment is £1,030.
After reducing their monthly payment by 50% for three-months…
- The amount they owe would have increased by over £2,480 because they haven’t paid some of the interest due.
- When we next recalculate their mortgage payment their monthly payment will increase . We recalculate it every year to make sure they’ll repay their balance by the end of the term.
- They’ll pay over £935 more interest over the term of their mortgage, unless they make further overpayments in the future.
If their mortgage was on interest only, the amount they would need to pay back at the end of the term would have increased by over £858. They’ll also pay more interest over the term of their mortgage.
You should think carefully before missing your mortgage payments and always get in touch with us first. If you’re worried about your finances, there’re lots of places to go for help. You can find details of the debt advice organisations we work closely with under the Independent Resources tab of our website.
- Call us on 0330 159 7152.
Phone lines are open between 8:30am and 6:00pm Monday to Friday.