Making overpayments - need to specify capital overpayment?

J

Joe5791

Registered User
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17
Hi folks,
I've been onto my bank (BOI) this morning, enquiring about how to go about making extra monthly over-payments onto my mortgage, as I'm on a tracker rate and my repayments are a good bit lower than they were 12 months ago.

Anyway, having read around on here, my understanding was that I needed to ensure that they are clear I want to make a "capital" overpayment, that my extra cash would not go on the interest.

However, the guy in the bank didn't seem to know what I was on about. He said the interest on my loan is calculated daily, any extra payments I make would reduce the capital owed, thereby also reducing the interest repayment owed. He insisted it was as simple as that. There are no hidden charges or extras, all we need do is send in a letter stating the extra amount we wish to pay, and they will do the rest... that stating we want to make "capital overpayment" would make no difference to how they'd do it!

This sounds to me like my overpayment would go towards a combination of capital + interest, but I'm really not sure.

Any advice ?
 
Im overpaying with ICS (Bank Of Ireland) they have a very simple form online that you can fill in. Its as plain as day in the form that you are instructing them to take the extra off the capital.

The sebsite is [broken link removed] and you need to register. Just keep an eye then on your repayments (which you can do on your online account) and make sure that its off the capital the extra money is coming.
 
I think by default overpayments are taken off the capital; doesn't make sense otherwise; personally I would put the money on deposit @ 4 - 5.5% and keep the difference...
 
What is this "interest" that are you afraid of paying by accident?

You're already covering the interest with your current payment. Any extra you pay has to come off the balance (capital).

You seem to have confused yourself unnecessarily.
 
Thanks guys,
Yeah, maybe I'm confusing myself unnecessarily!
I also have considered just putting the extra cash on deposit, as the mortgage rate is very low now indeed.
 
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