Overpayments have caused Halifax to reduce monthly payments?!?!?

andywall

I have a Halifax fixed rate mortgage. I pay a monthly of £715. Recently decided to overpay and sent them two checks for £200 over last 2 months with instructions that they should be taken as part repayment of capital.

Today I have received a letter from them saying thanks for the money and that they will now be reducing my monthly payments to £710.

Have I achieved anything by overpaying or will they keep reducing my monthly payment every time I overpay more to compensate?

I assumed that they would keep taking the £715 per month that I agreed with them when I took out the mortgage. I figured that by overpaying the odd bit here and there I would get the mortgage out the way quicker.

Is this right?

keld

This happened to me the first time I overpaid. I had to ring and then write to confirm that I wanted to keep the original monthly payments. Don't let them fob you off.

It's definitely worth overpaying, every little helps. I rounded up my payments a couple of years ago, but I've only just got my DH on board and when you do the sums (courtesy of the more experienced MFW) it's possible to save a small fortune in interest and be MF years early. Keep up the good work.:D

toby_puppy

keld wrote: »

This happened to me the first time I overpaid. I had to ring and then write to confirm that I wanted to keep the original monthly payments. Don't let them fob you off.

...same here with Nationwide, I had to ring to tell them I wanted to keep the original monthly payment - I'm overpaying by the maximum £500 per month at the moment - hoping to finish in 4 years instead of the original 12 years remaining.

JayZed

I've had the same experience. Reducing payments is always the banks' default option, but you just need to give them a call and tell them you want to reduce the term instead.

seven-day-weekend

My house was paid for in the 90s by making regular small overpayments, but even in those days every time I did so I had to tell the Staffordshire Building Society that I wanted to keep the repayments the same.

They want us to 'go full term' I suppose.

setmefree2

It is worth keeping the normal payment the same if you can. Our normal repayment is about £1500 on our mortgage which was £250k. So now the payment should be about £750. So we overpay about £750 every month before we make any additional ops.

Good Luck:D

Ed_Zep

It is better to keep the payment the same.

I let mine drop, though as I have a much lower payment that is very manageable and overpay as much as I can.

It's not as "scientific" but it works for me.

mau408

I've done this many of times. Halifax's usual fee is £10 for reducing the term, however if you overpay and request the reducing of term (i.e. keep the payment the same) at the same time they usually waive the fee. I'd go with trying to get a reduction of term. Be careful however that you keep a tab on your overpayment cheques as halifax's method of determining your 10% is not straight forward. If you are no where near then don't let this worry you - I wish you all the best with the overpayments.

FairyElephant_2

WARNING! You may find that if you ask them to reduce the term whilst you are on the fixed rate deal, thay consider that 'changing the terms' of your mortgage and charge you accordingly! (Happened to a friend of mine). If they are likely to do this, just keep overpaying until your fixed rate ends and then ask them to reduce the term accordingly.

I am in a similar position to you with NR - I contacted them and asked them to always keep the payment the same until I told them otherwise, and now they keep writing to me to tell me that my minimum payment has changed, but they state in the letter that I have an agreement with them to keep the payment the same.

When I get to the end of my fixed rate in June 2010 I will redo the mortgage for a shorter term, depending on how much extra I've managed to overpay at that point.

HTH,

FE

moominyak

Hi andywall,

I posted a similar query a while ago, here's (hopefully) a link to it:

http://forums.moneysavingexpert.com/showthread.html?t=1109813

I was confused because my minimum repayments weren't coming down despite overpaying.

Turns out that they only re-calculate the repayments when there's a change to their SVR (and if you're on a fixed rate, only if you've been making overpayments).

HTH and good luck with the OPs

andywall

Thanks for all your help. I'll ring them tomorrow and see if we can keep our fixed monthly payment as was, namely, £715 and then follow it up with a letter.

I've read the T&C's in some depth and do not recall there being any clause as regards there being a penalty for reducing the term.

I'm also nowhere near the 10% I'm allowed to overpay each year. I would need to overpay 10k this year which is unlikely to happen sadly.