A Total MFW

Mortgage = 70K Halifax repayment morgage 5 year fixed 25 year term with flexible 10% overpayments allowed. Just over two years through fixed term. Current value 50K - A shaving of 20K due to standard payments and overpayments upto 10% (7K first year and about 6K second year.

Our plan is to change to another mortgage product in 3 years time but in the meantime....

I am a total MFW however inorder to become one I am trying to make overpayments as and when I can upto this so called 10% fee free overpayments (which is what I can roughly afford). The fees that I would occur afterwards are a waste of money so I wish to pay the maximum amount as possible without occuring overpayment fees. However Halifax entertains that the 10% is for a 12 month rolling period and I am led to believe by the mortgage adviser that the rolling year doesn't start until the first overpayment. I don't exactly understand what this means and how I can calculate this 10% figure exactly every year so that I can push it to the boundary without penalty. I am also currently in the process of trying to get this information from Halifax but struggling to get in it writing what amount I can overpay without penalty and how it is calculated.
Does anyone else have any experience in trying to push this 10% overpayment fee-free flexibility?
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Replies

  • hi there

    i can't comment on how to best work the amounts as i am just starting a similar mortgage deal myself.

    what i would add though is in theory you are going to be down to about £30,000 in 3 years time. at this point are you considering paying off asap or moving to a bigger house/mortgage?

    because, sometimes it is difficult to get a good mortgage deal for around that amount or under 25k (please someone correct me if i'm wrong).

    so, wondering if you would save any more spare money in isas etc to finally overpay at the end?

    good luck in your quest!:T
  • mau408mau408 Forumite
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    I didn't realise that there would be a potential problem with getting a good mortgage deal with about 25K. Maybe I could also ask if this the same for all mortgages less than 25K?
  • hi there

    i'm bumping this so that maybe one of the mortgage experts will see it!

    i think that a lot of lenders don't do mortgages under 25k - but your own lender may let you carry on, just with a different deal/rate.
  • mau408mau408 Forumite
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    Thanks sazza

    I thought I'd bump it too so that maybe one of the mortgage experts will see it!

    Ho Um! Still awaiting a letter from Halifax! - might be waiting for me behind the door later.
  • mau408mau408 Forumite
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    Anyways I will try to explain my theory/understanding at the moment in accordance with the mortgage advisor with how the 10% overpayment rolling period is calculated on my HALIFAX mortgage is calculated using the following hypothetical example for easier numbers.

    I take a repayment mortgage for £100,000 on July 1st 2000 - 25 year term, 5 year fixed at 5% which is flexible - offering 10% penalty free overpayment.

    Ontop of regular payments on July 2nd 2000 I make £1 overpayment (starting my 1st rolling 12month period - yup a single pound)

    That means until July 1st 2001 I can pay a further £9999 on top of regular payments - at any time although I might not be able to.

    Say (for ease of calcs.) on July 3rd 2001 my outstanding morgage balance is now £85,000. Then on July 3rd 2001 I make £1 overpayment (starting my 2nd rolling year).

    I can pay until 2nd July 2002 another £8499.

    Note that within a week I can actually pay off 18.5% of my original mortgage end of Jun - beginning of July.

    Overall it is better to pay as much off as early as a MFW (making sure youve got enough for a rainy day, etc). But according to this theory it would be in your best interest to make your rolling year period start as early as you can i.e. pay the extra pound the day after taking the mortgage out, because until that rolling year has ended you are stuck with that 10% for the 12months. And starting your rolling year earlier means that 10% of your outstanding balance is actually higher because you are also making standard repayments.

    I'm still waiting the letter from Halifax to confirm some things along these lines. I started this line of enquiry in January with Halifax but they don't seem to want to release this information. I'm now starting to wonder why.

    Please note: It is important to know that this concerns a Halifax Mortgage and another lender will calculate the 10% in a totally different way. First check with your mortgage lender. I hope this can be of some use to other Halifax Mortgage Owners such as sazzycat and those considering Halifax mortgages.
    But I'm still wondering if any of you have any experience of pushing this 10% repayment theory.
  • saloosaloo Forumite
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    Hi Mau408
    I was in a similar situation as yourself and finding that the 10% overpayment wasn't always enough. I decided to reduce the term of my mortgage, thus making my monthly repayment larger. I can still overpay by 10%, but have knocked over 10 years off my mortgage term, no fees for doing this either. If at anytime things get tight, then I can always up the term again, no fees involved. Hope this helps.
  • mau408mau408 Forumite
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    Thanx saloo,
    But as far as I am aware I can't reduce term, until end of fixed without penalty :(
  • Not only will you find it difficult to find a mortgage if you only (!!!) owe 25k but the ones which are available will be v expensive as they will probably have arrangment fees which will be v high as a % of your loan.

    No doubt I'll be shot down in flames for suggesting this..... I'd consider when the time comes remortaging for a much higher sum to avail yourself of more deals. Make sure you get one with no limits on overpayments. Once the mortgage comes through then pay off the large extra lump sum you had borrowed and you'll end up with a better deal and owe the same as before.

    Good luck.
    Debt 17 12 06 - £7700.:eek: 1st Feb 07 £6903, getting there ;) 1st March 07 £6666 (yikes!) 1st April 07 £6329 17.8% 1st May £6085.48 21%, 1st June £5522.13 28.3%, 1st July £5194.46, 32.54%, 1st Aug £4700, 39%, 1st Sept £4411, 42.7% :j :j:j
    Dreaming of Another Country Club Number 12!!!!!
  • mau408mau408 Forumite
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    Really, thanks alot for this information. I'm glad you've pointed this out to me. And sorry to shoot you down but I still have my original question/theory I wish to answer.

    Letter promised today or tomorrow by Halifax!!!! Whether it comes is another matter!
  • mau408mau408 Forumite
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    Hi old and new folk to this thread, I feel like I don't know why I bother sometimes. I've still not heard owt from them ppl who call themselves Halifax.

    Where is that mortgage code book? I'm sure they're meant to tell me everything I want to know!!!
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