capital or interest?

emmalita

Hi my mortgage is with halifax,have made a couple of overpayments this week. First one of £100 and second of £150 made yesterday. My mortgage went out on monday the 1st and day after the balance was £110,257.15. I have just checked again after making these overpayments and it has only reduced by £75, i thought it would of reduced £250.Surely the overpayment should go off the capital,i feel really disapointed.Can anyone shed any light on this please,Thanks in advance,by the way interest rate is 6.29

wantabetterlife

Hi Emmalita, i have a halifax mortgage too and i think i know what has happened. For example say that there were five days between the day you payed your normal mortgage payment and the day you made the overpayments, when the halifax adjust your total outstanding they include the five days interest that have been accrued since your normal payment (ie) daily interest method. However when your next mortgage payment goes out there will be less days interest taken from it, approx 25 days will be charged for. Hope that makes sense
WABL

financialbliss

Hi emmalita,

With a £110,257 mortgage @ 6.29% you're paying approximately £6,935 a year in interest or £19.00 per day.

So any overpayments are going to be offset by your mortgage interest. If you only made a second overpayment yesterday, it may not have hit your mortgage account yet, thus the £75 reduction is the net result of the first overpayment?

Your daily mortgage balance will also be dependent on how Halifax apply interest to your account. My Nationwide mortgage interest is calculated and added daily - can't speak for Halifax as I've never had a Halifax mortgage.

Perhaps a quick call to Halifax would shed some light on your issue?

Financial Bliss.

daveybea

Emma -did you instruct at the bank that you wanted the payment off the capital amount and to reduce the mortgage term accordingly otherwise you end up with the mortgage monthly payment decreasing but the length the same which doesn't save you much?

emmalita

Hi,no i didnt think I had too,thought it would automatically go of the capital?

getmore4less

wantabetterlife wrote: »

Hi Emmalita, i have a halifax mortgage too and i think i know what has happened. For example say that there were five days between the day you payed your normal mortgage payment and the day you made the overpayments, when the halifax adjust your total outstanding they include the five days interest that have been accrued since your normal payment (ie) daily interest method. However when your next mortgage payment goes out there will be less days interest taken from it, approx 25 days will be charged for. Hope that makes sense
WABL

Do halifax compound daily or monthly?

If monthly then this is a very sneeky(interest is only due mointhly) and cheats the customer, but only tiny amounts.

emmalita

hi,its calculated daily.

emmalita

Hello again,have just spoken to halifax who have assured me that it is definitley going off the interest.They said im paying about £20 interest a day and the best time to check my balance is the 2nd of the month ,the day after i pay my mortgage.

getmore4less

emmalita wrote: »

hi,its calculated daily.

But when is it compounded? (ie. when each daily interest amount is added to the mortgage ballance)

If it is monthly then the daily interest does not accumulate more interest untill it is added to the capital(usualy once a month at mortgage payment time).

So by applying the payments to the acumulating interest you are paying more interests on the capital that could have been paid off.

based on
With a £110,257 mortgage @ 6.29% you're paying approximately £6,935 a year in interest or £19.00 per day.

This means that for each £19 interest that is paid early you are paying and extra 0.33p per day.
So like I said not a lot


On my mortgage(Barclays) it is clear interest is calculated daily and added to the mortgage at month end, all payments come off capital.

James_3_2_2

emmalita wrote: »

Hello again,have just spoken to halifax who have assured me that it is definitley going off the interest

Is this a typo because you would want to pay it off the capital surely?