Change term THEN overpay?

Brallaqueen

Hi All

I have a mortgage with Halifax, over 35 years at 7.29% interest. I went to speak to an advisor on saturday about making overpayments and was told that:

-any payment I would make would reduce the mortgage monthly payment and not affect the capital

-if i wanted to pay off capital, i would have to shorten the term of the mortgage first (from 35 to 29) and that would increase my monthly payment by the amount i wanted to overpay.

I left without making a decison because what was said to me was totally against how I thought overpayments would work as seen on this site- was the advisor giving me the correct information?

beecher2

They told you a load of nonsense.

If you make a capital repayment, you have the choice of either cutting the mortgage term and keeping your payments the same, or keeping the mortgage term the same, and reducing your payments. They used to charge £10 (?) to cut the term, but not sure if they do that now.

It doesn't matter which you do though - the money still comes off the capital.

If you are wanting to overpay each month it might make more sense to cut the term (especially as yours is so long) but that certainly isn't the only option you have.

I always found that the Halifax's call centres made more sense than their mortgage advisers so you could give them a phone to clarify things.

Brallaqueen

Thank youbBeecher2. It's nice to be reassured that I'm not stupid/crazy :j

I def don't want to cut the term right now, I want the flexibility of making overpayments when I can rather than increase my mortgage payment each month.

I shall contact a call centre, see if they are more helpful. Many thanks again!

michaels

The only issue might be if you have a deal that restricts overpayments (say to 20% of your normal monthly payment) in which case shortening the term and thus pushing up the normal payment would then let you overpay more.