Outstanding Mortgage Balance

runicfire

Hi,

I have a mortgage with the Halifax - I can log in online and view the current outstanding balance.

Yesterday, it was £101,220.48. I wrote the figure down because I was testing sending an overpayment of £1...something I always do to check the money hits the correct account before sending larger amounts.

Logged in today and the outstanding balance is £101,252.51. It's gone up...I wasn't expecting that!

I'm assuming this is something to do with them calculating interest daily? As the online system doesn't give a breakdown of each months payments I can't work out exactly what is happening each month to the balance. Next annual statement would be in April.

Can anyone help to explain this?

latecomer

Daily interest being added. Use one of the online mortgage calculators to see what happens to your mortgage amount over time.

happycamel_2

Yes, it will rise for 30 days as the interest is added then drop when you make a payment then rise again but this time the rise will be a tiny bit smaller etc until it is paid off (assuming a monthly repayment mortgage).

runicfire

Ah, I see.

According to an online calculator, my monthly payment of £527 is split into (roughly) £180ish capital and £340ish interest. I'm generalising these figures.

So assuming no overpayments, over the month, the outstanding balance increases by a fraction of the £340 until it's all added. Then decreases by £527 once I make my payment. Then next month it increases slightly less each day as the balance is reduced.

I didn't realise the balance shown online worked like that. So I'd need to check an annual statement or contact Halifax to know if the overpayments are being applied?

It's just that I wanted to start sending regular overpayments of up to £400 a month - but I'm wary of watching cash 'disappear' into the ether and not knowing whether it's actually getting the right place\reducing the balance!

Guess I'll give them a call to clarify. Thanks for the help guys.

droiderm

Or try sending around 35 quid, you would expect the balance to stay roughly the same.

Obvisouly the amount of interest is determind by the amount of loan and the interest rate.

Paying 32 quid PER DAY just in interest should be enough to make anyone overpay.

Do you mind me asking what your interest rate is?

runicfire

droiderm - It's 3.99%. On the Halifax SVR as I can't really get anything better.

I'm not convinced the balance is updating every day online as by my calculations it should be about £11\12 each day interest. So it could be updating only every few days I suppose. Haven't really logged in on enough consecutive days to see if it changes every single day.

That's why I really want to overpay now, while I have the extra cash!

latecomer

It should be around £11 a day interest by my calcs.

Thrugelmir

runicfire wrote: »

So I'd need to check an annual statement ?

Definately yes.

Easy enough to maintain a spreadsheet and check when the statement arrives.

opinions4u

I wouldn't pay much attention to the Halifax online mortgage debt figure.

It doesn't reflect a settlement figure, appears to add interest at inconsistent times (although it's usually over month end) and is slow reflecting capital repayments.