Mortgage Overpayment

jgrantw

Hi Everyone,

I've got a mortgage with the Halifax and last year I made a couple of lump sum payments totaling £34k. At the time I was advised by the Halifax that making overpayments was a good idea as I could make underpayments at any time as I hadn't asked for any changes to the term of monthly payments on the mortgage.

My personal circumstances changed recently which meant I really needed to either underpay the mortgage for a period or get some of the lump sum back.

I was surprised to be told that as of February my overpayments had been captialised and as such I'd benefited from reduced interest payments.

I have the following questions:

1. Can they just capitalise payments without my consent or request
2. My payments are exactly the same as they have always been (at the current interest rate) so I've seemingly had no benefit from the Halifax capitalising me overpayments.

Any help would be appreciated as the Halifax won't even discuss with me and just keep telling me it's happened now and there is nothing they can do for me unless I look at remortgaging my house to release the overpayments as capital.

Thanks in advance.

Thrugelmir

jgrantw wrote: »

2. My payments are exactly the same as they have always been (at the current interest rate) so I've seemingly had no benefit from the Halifax capitalising me overpayments.

Every month you've charged less interest. So although the payments have remained the same , you've repaid more capital back.

When did you take the mortgage out with the Halifax? As mortgage payment holidays are allowed after 12 months.

Goldiegirl

All large overpayments with the Halifax were keyed on to their systems with a 'PRT' indicator, to show it was a part repayment of the capital.

Small monthly overpayments were generally not keyed with this indicator, so the account would be put into advance by the small amount.

Your account would not show as being in advance, as you made large overpayments, which the Halifax treated as capital repayments. They wouldn't want to have the account showing as £34000 in advance.

On MSE forums there seems to be a pre-occupation with becoming mortgage free.

It's understandable to want to pay off the mortgage, but sometimes it can be better not to throw all your money at the mortgage, as sometimes cash might be needed later, as is the case here.

As already mentioned, a payment holiday could be a solution to this situation.

jgrantw

Morning, thanks for the quick replies. A payment holiday doesn't seem to be an option as I'm only able to do so for 3 months where I will need 12 months+.

I think I understand what you are saying about paying less interest. In this scenario do you think it would be possible to make underpayments up to the value of £34,000 as I would imagine this has the reverse impact on the interest?

I'm just really annoyed that the advice from the mortgage adviser was incorrect and now I'm left in this situation. If I'd have known the money would have been rolled into the mortgage I would have never made that kind of overpayment.

Thanks again.

maninthestreet

Why do you need a payment holiday of 12+ months? No lender is likely to approve a payment holiday of that length.

jgrantw

Hi maninthestreet, I'm not looking for a 12 month payment holiday, I just want to use my overpayments to make underpayments as I was advised at the time I could do.

jgrantw

Interestingly i've been told the reason the overpayment has been capitalised is that the Halifax have updated their internal systems so had to make the change - without telling me.

They have raised a complaint as they can see on the system I was told I can make underpayments.

Fingers crossed

Dave_the_Ginger_Cat

When I made a capital payment last year to my HBOS mortgage, I was given the choice, and a letter was sent to me to confirm this decision. Not that it's much help now, but am surprised you didn't get one