Halifax mortgage overpayment

jimladin

Hi,

reading this site has inspired me to start overpaying my mortgage in order to get rid of it as soon as possible. Currently i owe £65536.65 and the term remaining is 23years.

I have just added the mortgage to my online halifax portfolio which is great as it shows how much you currently owe.

I then phoned up the halifax mortgage deptartment to ask a few questions and to be honest they were useless. I hope that some of the experts on here can answer them for me.

My question is:
Can i simply transfer some money into the mortgage account (ie use the account number and sort code) via online banking? The guy from halifax implied that if my overpayments weren't going to be of a fixed amount each month the best way of doing it would be to send them cheques. Surely this is not the case!

I'm keen on just transferring the money via online banking, but i'm scared that this money will be "lost in the system"

Can anyone that has a halifax mortgage advise me? I realise that i am allowed to pay up to 10% of the mortgage of each year without penalty.

Thanks in advance

regularsaver1

Ok - how much are you looking to over pay per month?

You are best to set up a standing order really (standing orders can be ammended and so are flexible)- i would not advise on the online system. You are also best of if you can to overpay at the beginning of the month due to daily interest. Do not send cheques.

Another option is that you reduce your term to your desired monthly payment - but this will not be as flexible as it is a lot harder to increase your term back.

standing order is a choice factor

the 10% per year applies if you have a product with early repayment charges - if not then you are free to overpay anything

jimladin

wow! Thanks for the prompt reply!

For the next four years i plan to overpay by £200 per month; or at worst £100. Currently i have a car loan which has four years left to run, after this loan has been paid off i will have a further £500 per month free to attack the mortgage.

jimladin

Can i just ask about the standing order... after setting that up using the mortgage account number and sort-code i presume that i will need to contact halifax to tell them not to reduce the monthly direct debit? Will i also need to call them to tell them that i have set up the standing order?

Suewre

I pay my Halifax mortgage online, I have never had any problems.

regularsaver1

No -not at all - your choice to send the standing order. will take about 3 days from out side of Halifax bank acc, and next day with Halifax

When a customer makes an overpayment , their monthly payment and term is not ammended without them requesting it

I look after existing mortgage customers. I saw a customer today that pays £1000 per month when their required payment is £560

The standing order option is the flexible. Direct debits do have the facility to collect to the nearest £100, but I presume this will ne benefit as much?

Teerah

my mum was told by the halifax that she could only overpay if she overpaid at least £1000 at a time which put her off, was she misinformed?

roswell

Can I suggest you look at clearing the car loan first as this probably has a higher APR ?? Then all free money can be chucked at the morgage ??

My reasoning for thsi is you will be charged more interest on the car loan if you keep it going for the 5 years if you pay it off sooner you will have paid less interest (Depending on the loan agreement) If its 0% car finance then obviousely go ahead and pay the morgage.

jimladin

roswell wrote:

Can I suggest you look at clearing the car loan first as this probably has a higher APR ?? Then all free money can be chucked at the morgage ??

My reasoning for thsi is you will be charged more interest on the car loan if you keep it going for the 5 years if you pay it off sooner you will have paid less interest (Depending on the loan agreement) If its 0% car finance then obviousely go ahead and pay the morgage.

yeah, i had thought about that. In an ideal world that's exactly what i would do, however there is a penalty for paying off the loan early. It's that dreaded rule of 78 thing. The loan is through bmw fianance and the APR rate is 6.25%, not that bad i suppose. Correct me if i'm wrong, but with the rule of 78 trying to pay of the loan this early would result in big charges that would negate the benefit

roswell

Ah yes you could end up paying back more than you borrowed + interest due to the penalty charges,

In this case Morgage free here you come :-)

regularsaver1

Yes teerah - eg. direct debit is taken. in town bit of extra cash, you can pay a bit off the mortgage, and a week later - obviously there are sometimes limits, but she was mis informed