I've made two overpayments to my mortgage recently and both times, the bank (Bank of Ireland) have reduced our monthly payment, not the term. I rang up after the first time and asked them to swap to term reduction and they said fine it's all sorted. After the 2nd overpayment, turns out it wasn't sorted and I need to complete a term reduction application each time.
Rang them this afternoon and went through a long process of applying for a term reduction, which I stopped at the point of being asking what I want to reduce the term to - that's not what I want to do, I want my overpayments to be credited to my outstanding balance, keep the monthly payment the same and bring the term down. Apparently I can't do that, it's either overpay and have a reduced monthly payment or apply for a term reduction. Is that standard or are they trying to pull a fast one so they keep making the same interest out of me? Everything I've read suggests that when opting to make overpayments within your limit you can reduce you monthly payment or your term but banks like to default to the former.