Halifax Mortgage Problem

mspittlehouse

Hi,

First post here and I am really hoping someone can help.

We have a mortgage with Halifax which is split into 2 parts:

Part 1 - 5 year fixed rate at 7%
Part 2 - Tracker at 1.8%

We took the mortgage out 4 years ago when we moved house, we took the tracker with us and topped it up with the 5 year fixed.

After 4 years the 5 year fixed rate is £300 less than the original figure. The tracker has gone down loads. Halifax telephone system told us this is correct and all payments go off the lower interest rate part first.

The documentation shows 60 payments of £500 off the higher rate and £600 off the tracker.

Can they be right saying none of the fixed rate has been reduced? They just keep saying "thats how the system used to work" and tough.

Any advice would be greatly appreciated!

Thanks
Mark

Waffle_On

My mortgage is also in two parts, but with Nationwide rather than Halifax. As far as I know, the way Nationwide handle is is 'the norm', but I'm not an expert!

We have a monthly payment for each of the two parts of the mortgage - it actually comes out as two separate direct debits. That way the appropriate combination of interest and capital repayment goes to each part. Depending on how much you owe on each part, and whether the overall term is different, one may pay off more capital than the other.

If you have a lower interest rate or shorter term, then you will usually be paying a higher proportion of capital, as you seem to suggest you are doing with your tracker.

If I were in your situation I would be looking to do two things:
1. try to get a better deal on the fixed portion when the current fix expires.
2. If you can afford to and there are not prohibitive fees, overpay on the part with the higher interest rate - all overpayments come directly off the capital and reduce the interest you pay in future.

mspittlehouse

Hi Waffle_On,

Thanks for the reply - that is how I expect it should work. Ours is not!

We have paid 38 * £500 payments on the 7% part and the capital has come down £300!

That is definately wrong.

Mark

Goldiegirl

When I worked at the Halifax, there was a strict order in which payments were allocated depending on what interest rate product the customer had.

Unfortunately, I can't remember what it was.

I used to have extensive info, which I used to use to answer customer letters on this matter, which explained in detail, because it can be quite complex.

All I can suggest, is, that you ask them to explain in writing the order in which payments are allocated to the interest rate products.