Overpaying Interest Only Halifax Mortgage - 10% issue

lvm

Hello,

I wonder if someone can clear something up for me?

I have a £63,950 SVR mortgage with Halifax with 19 1/2 years left. (it's currently £64,570 due to some stupidity a few yrs ago).

Now, this was originally taken out as interest only but when I've phoned a couple of years ago to increase the payment they have changed it to "part interest, part repayment". Not too fussed about this as I've worked out the numbers and the correct amount is coming off the capital every month.

I'm going to contact Halifax for details on how to make overpayments as I've increased my direct debit again but would like to be able to make ad-hoc overpayments when I'm able to.

Thing I'm curious about is the 10% overpayment thing - I know my mortgage agreement is subject to this however what does it really mean? Should I only be paying 10% more than my interest only payments or is it 10% extra off the capital? My new direct debit (as of end Dec 12 would take me over the 10% of IO payments).

I'm guessing they will give me a rough idea of how much I can overpay in £s based on my current direct debit but would be interested to know beforehand just for my knowledge.

Currently Halifax have on their records that "Pensions" will be paying the capital off at the end of the term - these are currently non existent so trying to get myself at least on track for repayment at the end of term.

Thanks very much!

betmunch

its 10% of the mortgage balance for the year, so if your mortgage balance in £100,000 that year you can overpay by £10,000 during the course of the year without penalty.

However, if you are on the SVR you dont have the 10% limit, just overpay as much as you can comfortably afford

Thrugelmir

Consider switching the mortgage onto a full repayment basis. That way you'll know that the mortgage will be paid off completely.

InsertWittyName

betmunch wrote: »

However, if you are on the SVR you dont have the 10% limit, just overpay as much as you can comfortably afford

I would double check this... I'm on SVR with Halifax and I DO still have the 10% limit.

betmunch

InsertWittyName wrote: »

I would double check this... I'm on SVR with Halifax and I DO still have the 10% limit.

really? Well I stand corrected then. I have never arranged a Halifax mortgage that had any penalties to overpay while on the SVR, obviously though they are out there

Something

I spoke to them 2 days ago, they told me it was 10% on the deal, then there's no limit once you hit the SVR. Obviously I would check though.

catieeb06

InsertWittyName wrote: »

I would double check this... I'm on SVR with Halifax and I DO still have the 10% limit.

Are you sure you're on SVR? Or just a rate that is soon to end?

Having worked for Halifax it is indeed correct that once you've reached the SVR then no overpayment limits are enforced you are simply free to overpay as much as you wish to.

madeupname1

betmunch wrote: »

its 10% of the mortgage balance for the year, so if your mortgage balance in £100,000 that year you can overpay by £10,000

I would also double check this. I was recently looking at an HSBC mortgage product and, on that product, you could only pay your monthly mortgage payment plus another 10%

Comyface

betmunch wrote: »

its 10% of the mortgage balance for the year, so if your mortgage balance in £100,000 that year you can overpay by £10,000 during the course of the year without penalty.

However, if you are on the SVR you dont have the 10% limit, just overpay as much as you can comfortably afford

This is correct. Your KFI/Mortgage Offer may say something along the lines of 'in any one year you may repay up to 10% of the amount outstanding on your special rate product'. It's a rolling 12 months, so the year starts when you make your 1st overpayment. So, you couldn't pay £10k in december and another £10k in january for instance, you'd need to wait 12 months.

Then, once your 'special rate product' ends, you go onto SVR, with no overpayment restrictions.

InsertWittyName

betmunch wrote: »

really? Well I stand corrected then. I have never arranged a Halifax mortgage that had any penalties to overpay while on the SVR, obviously though they are out there

catieeb06 wrote: »

Are you sure you're on SVR? Or just a rate that is soon to end?

Having worked for Halifax it is indeed correct that once you've reached the SVR then no overpayment limits are enforced you are simply free to overpay as much as you wish to.

Apologies I was incorrect - I had missed a key point in the blurb (highlighted below).

Thanks for correcting me.

The limit on any extra payments you can make each year before the charge applies is 10% of the mortgage balance. This means if you have a mortgage subject to an Early Repayment Charge you can pay up to 10% of your mortgage balance before incurring the charge, unless you go on to repay or change the rest of the loan within the next six months. The charge varies, depending on how long you have left on your mortgage deal.