Mortgage daily interest v yearly

Kevvy_3

I've just had a mortgage review with my lender as my fixed rate is finishing soon(Dec31). Towards the end of the review, I was told that I could instantly reduce my existing monthly payments by converting to daily interest instead of yearly. I was told that this would save me around £11 per month! I obviously agreed to this and was told that this option was available for over a year! I asked why we were not advised of this earlier and the reply was that it would be a huge admin cost to let everyone know this and relied on people asking for a review, like me. Is this is a real saving on daily interest or is it better to have it yearly and are there thousands of other customers missing out on this? Also, I asked if we could transfer onto the advertised 2yr fixed at 4.39 and was told it was for new customers only.....(advert on telly came to mind) ......By the way, I'm with Halifax.

[Deleted User]

OMG yes go for daily interest, you'll save £££ in the long run especially if you overpay!

Sooler

Wonderful Halifax. You'll save most by switching to daily interest and have your repayment amount recalculated with every change in the interest rate, as opposed to only having it recalculated once a year.

If it's recalculated once a year and there is a change in interest rates you'll either be making over or under payments. Wonderful Halifax will not, I believe, take account of over payments until the date of the next yearly review, in the meantime they will not pay you interest on the money you overpay, nor will each overpayment reduce the oustanding capital.

If you make underpayments Wonderful Halifax will charge you interest on the oustanding amount from the date it was due, these oustanding amounts will accrue interest throughout the year until the yearly review, at which time the sum of the oustanding amounts plus accrued interest will be added to the oustanding capital.

Sooler

Kevvy wrote:

I asked why we were not advised of this earlier and the reply was that it would be a huge admin cost to let everyone know this and relied on people asking for a review, like me.

Complain, and ask them to backdate the change to daily interest to when it was first available, and have all your repayments made since then recalculated and adjusted.

JohnG

Crikey, this brings back bad memories of that unmentionable bank - I highly recommend you look at switching to a better deal with another bank/building society as soon as your fixed rate ends - it may cost you a small fee but I am very confident you will be better off every which way.
Actually £11 per month doesnt sound like much of a saving but obviously depends what rate you are on at the moment, still I'm sure it would be worth shopping around before signing back up with that current bunch.
It's an opportunity not to be missed really............. :j
Cheers :beer:
PS I switched to the C&G - they were very helpful and their solicitors who processed the legal paperwork were excellent - was very impressed.

MarkyMarkD

Sooler

I don't know what your grudge is against the Halifax, but your points are just wrong.

(1) If you over-pay or under-pay on daily interest, your interest will be calculated on the correct amount outstanding. That's the point of daily interest. The idea that it only works in a lender's failure is rubbish.

(2) There is no basis for complaint. If you take out a mortgage and it's contractually on an annual interest basis, that's what you are contractually committed to. Just because they choose to offer daily interest to new borrowers, or indeed to existing borrowers who opt for it, doesn't mean they are obliged to do so or that they owe anything to anyone who didn't get offered it, or choose it.


And generally, daily interest will ONLY save anyone "lots" of money IF they overpay. On an interest only mortgage, with no overpayments, it will save you precisely NOTHING. For the average repayment mortgage, with no overpayments, it will save only a small amount.

jobbingmusician

I admit I'm not a very conscientious MSE'r, but if your fixed rate is coming to an end, surely now is the time to be shopping around, not just accepting the crumbs that Hallifax seem to be throwing you to encourage you to stay with them. :rolleyes:

Please be clear, I have nothing against the H and no particular mortgage company to recommend. But in your shoes I'd be feeling really angry if

1. I had the option of saving money by switching to a daily rate calculated scheme and they hadn't told me, and

2. There was a better scheme available only to new customers.

Especially the second, would make me feel like becoming a 'new customer' - if not of the Halifax, then of someone else! I'm sure if you click on 'Mortgages and Homes' over there <

---

that there is all sorts of useful info on shopping around.

There's a third reason I'm potentially angry for you. Who initiated this review at the end of the fixed rate period? Was it you, to try to get them to give you a good deal? (if so, well done!)....I have the feeling from your post that they initiated the review. GRRRRRRR!

I'm getting really annoyed now (and it's all in my imagination ) because I think they called you in to offer you some crumbs (daily interest calculation) to STOP you thinking of moving. OF COURSE they can match their 'new customer' deal to you - and I bet they will do, if you threaten to move. But I also bet that there's a better deal our there for you.

I only say this because I do keep an eye on who the best mortgage providers are, and I don't remember seeing the Halifax's name there recently. I could be wrong, in which case get the best deal you can out of them, and stay with them!

Sooler

MarkyMarkD wrote:

Sooler

I don't know what your grudge is against the Halifax, but your points are just wrong.

(1) If you over-pay ...

(2) There is no basis for complaint. ...

1) You're right, I was talking baloney , may be that's how it was before daily interest.

2) When they first introduced daily interest years ago they did their best not to let existing customers know they were entitled to switch, the only mention being buried away in an obsure place on their website. Anyhow, they did backdate the switch, although it is was only a couple of months.
If the OP was contractually committed to annual interest guess there may not be much point complaining, but then again, why not.


Funny how the Halifax are only letting customers know of possible savings if they ask for a review. One sentance on their website would be better than nothing.

JohnG

The Halifax - Hmmmm.....
Reading the latest comments on this thread reminded how they did not like to keep their customers informed of anything, especially if it was in the Halifax's interest not to do so.
I've just dug into my file relating to an Insurance Premium in 1989 that we would definitely have requested thru our bank at the time, to set up an S/O (We were originally advised to set up S/O's by the Halifax incidently). Because of the time period our bank (Lloyds) advised they no longer held the paperwork so they couldnt confirm if they had rcvd our request or whether they had set up the S/O.

We only discovered that the Halifax apparently never received the premiums when we finally broke free of them in 2003 when we found we had been paying interest on the "Outstanding" amount all those years and then had to pay it off on top of the redemption fees etc that we had to incur.
We complained to the halifax but were told by them....
That because we had not complained within six years of the "Act or ommission" and/or that we "Didnt complain within three years when we should hv been aware (or reasonably been aware?) that there was no cause for complaint"!
They based this on the fact that they issued yearly statements so we should have seen from them that the premiums remained unpaid. Well, if you were to see their statements it was impossible to isolate outstanding debts such as this - they didnt show any information to break down the total amount showing so no way could we hv realised. Anyway, why on earth would we leave a single years insurance premium on top of the mortgage - it makes no sense.

We took it the FOS who to our horror, agreed with the Halifax because "We should have been aware from the statements" Personally I defy anyone to be able to identify the outstanding premium from the statement, it was not annotated or separated from the total amount which changed, every year up or down, depending on the interest rate fluctuations!

The final insult/comment that came from the halifax was to say it was:

"NOT COST EFFECTIVE TO INFORM EVERY CUSTOMER OF POSSIBLE ANOMILIES"

That to me, speak volumes of their priorities and, as I've said before, is completely contrary to how they portray themselves in their patronising advertisements.

I must apologise for repeating myself on these issues but admit the latest Endowment scandal with Phoenix/RSA has brought all these matters back to the fore as can't help feeling we have received nothing but unfair treatment from practically every financial arrangement we hv made (Not forgetting Equitable!) Hope you all understand.

The financial future looks slightly bleak for us unless we sell our house and move into a caravan - I hope these people can sleep at night - NOT! :mad:

Cheers for listening
John G

Glamourpuss_3

Hi Kevvy

I sympathise as also currently have a Halifax mortgage and when I asked about the fixed rate deals they have on their website I was told that they are for new customers only.

When I told the person who took my call that I was unhappy with the Halifax and that I would be looking for another provider they didn't care and didn't offer me the lower rate. The rates they offered existing customers were around 5.5%. If they had came to some kind of arrangement then I would have been happy to stay with the Halifax but they weren't interested. In my opinion they don't seem to care much about their current customers.