overpayments (online) concern...

james3333

hi all,
i have recently started making regular overpayments online with the halifax.
i am just putting in what i can/when i can £30-£100 per month.
the concern i have is that when i put in some cash, the overall balance of the mortgage appears to go up!
is this correct? is it just re-adjusting for some reason?
please advise...

Gary123456790

Best option is to call Halifax and check whats going on.

Is it an Offset mortgage where you are adding to your linked savings acct?

Gary.

james3333

Gary123456790 wrote: »

Best option is to call Halifax and check whats going on.

Is it an Offset mortgage where you are adding to your linked savings acct?

Gary.

Just normal repayment mortgage.
i have rang and asked for a statement
i assume its just interest balancing out the amounts

Thrugelmir

Once a month the interest will be charged.

So you need to compare balances on the same day every month i.e. the last working day.

james3333

Thrugelmir wrote: »

Once a month the interest will be charged.

So you need to compare balances on the same day every month i.e. the last working day.

OOOOH, er....... will have to check that against the statement then, bit confusing can anyone explain this further (particularly why the amount owing goes up?)
i would have expected it to go down by a smaller amount than i pay in E.G if i had £70,500 left to pay.......i put in £500, i would have expected it to come down to , say £70,350 or somthing.......does this make sense????

Thrugelmir

An example statement

31st May Balance owing £10,000
1st June Standard Repayment £1,000 - Balance £9,000
10th June Extra Payment £500 - Balance £8,500
30th June Interest Charge £350 - Balance £8,850

So between May and June the amount owed (£10,000 - £8,850) has reduced by £1,150.

Interest is not calculated and added daily. Just monthly.

james3333

Thrugelmir wrote: »

An example statement

31st May Balance owing £10,000
1st June Standard Repayment £1,000 - Balance £9,000
10th June Extra Payment £500 - Balance £8,500
30th June Interest Charge £350 - Balance £8,850

So between May and June the amount owed (£10,000 - £8,850) has reduced by £1,150.

Interest is not calculated and added daily. Just monthly.

excellent, that kinda illustrates how the overall oweing can jump 'back up' when interest is added on 30th. brill. great explaination there. k+:money:

The_J

Interest will almost certainly be calculated daily.

Thrugelmir's explanation is right though.

Thrugelmir

james3333 wrote: »

excellent, that kinda illustrates how the overall oweing can jump 'back up' when interest is added on 30th. brill. great explaination there. k+:money:

You should see the benefits of your overpayments now!

May seem slow to start with but like rolling a snowball, over time the saving of interest compounds more and more rapidly.

james3333

The_J wrote: »

Interest will almost certainly be calculated daily.

Thrugelmir's explanation is right though.

yeh, just checked halifax interest is calculated daily ( hence why the amount can change daily)
i still owe 75k of a 91k mortgage
tending to lump in up to £150 per month EXTRA at the mo so hopefully will start to see decent drops in amount owing soon, been paying for 8 years and only dropped 16k!!!!!!

Thrugelmir

james3333 wrote: »

been paying for 8 years and only dropped 16k!!!!!!

The benefit of overpaying the mortgage is back loaded.

After 20 years paying a mortgage on a 25 year term. You still owe over 30% of the original capital balance. So much of the early years is interest.

Even if overpayments are small. Over 20 years they still make a significant difference in paying a mortgage off quicker.