(HBOS) Does anyone know...

spursboy

... how overpayments on Halifax Mortgages work?!?

Background - I have an interest only mortgage with Halifax, opted for IO as I was spending money on new Kitchen, bathroom etc but knew in 6 months (i.e. now), when the work was done, I would be in the position to make overpayments.

I thought well my payment of £700 p.m. (ish) is the interest only so my balance outstanding will be the capital and whatever I overpay will reduce the capital and Halifax will either reduce my monthly payments (to reflect less interest being due) or they will stay the same.

I set up online access to Halifax yesterday, viewed the balance which was showing as £136,004.32... which was what I expected (apart from the £4.32!).

Thought to myself right I'll test the waters and see what happens if I make a one off payment from my Natwest current a/c to the mortgage account of say £29.32 (£25 plus the odd bit (I have OCD about seeing balances as round numners)).

Logged into Halifax this morning and my mortgage balance is £135,339.64 (Reduction of £664.68)

Does anyone have a clue to how this was calculated?

determined1_2

Hi spursboy

I have a halifax mortgage and make the overpayments by seperate standing order. You can't set this up yourself, so either ring up or go in branch. Having it as a seperate SO gives you the flexibility to change the amount as and when (you do have to ring up to do this as you also can't change it online). When you set it up make sure you say you want it to be a capital reduction payment and that you want the term to reduce, not the monthly payment (this is what I did, but not certain amount IO as mine is repayment). It could be that any overpayments on IO are automatically taken off the capital. Just ring up, always very helpful for me. It's also all in the T+C. Just have to dig around a bit.

In my case (as on repayment) whenever they change the variable rate (even though im on fixed) they reduce the monthly payment due to the overpayments so I have to ring up (yes, again) and say I want the payment to stay as it was.

Re the confusing balance. It always takes a couple of days to sort itself out. E.g. I pay mine on the first of the month, the interest is then charged on the first (but not all of it), but it then sorts itself out and the payment hits by the third. Give it until tommorow and you'll prop see it go back up

Cannot confirm any of this as you haven't given the ROI.

Good luck

spursboy

I spoke to HBOS at lunchtime and was advised that the figure shown on my online banking is rubbish and not to pay any attention to it!

The guy confirmed that if I just make payments by bacs from my Natwest account (i.e. as I would paying any other bill) they will be set against the capital.

He said if i wanted an accurate balance at any time then just phoned them up and they will send it out!