Please someone explain

hondacivic

I have a 10 year fixed rate mortgage with the Halifax, with 7 years left to run.

Every time there is an interest rate rise, my monthly payment goes down, and I have to keep increasing my standing order for overpayment purposes.

Please could someone explain why this is happening, why does my monthly payment decrease, I thought it was meant to stay the same throughout the 10 years?

Very confused - thanks in advance.

Jim

dunstonh

Are you sure it is fixed and not capped or discount? Did they action the fix rate?

I suggest you give them a call to find out as they have access to your mortgage details and will be able to answer it better than any of us can without your details.

hondacivic

nope it deffo a fixed rate.

Noz

well as you say, you have a fixed rate mortgage - your interest rate is fixed, not your payment.

Each time there is a rate change it sounds like Halifax recalculate your monthly payment, and because you have been overpaying (by standing order) you will be oblidged to pay less as you have decreased your balance by monthly overpayments.

As your required monthly payments decreases, if you still want to pay the same overall each monthly (required payment + overpayment), you are required to increase the standing order to make up the difference.

herbiesjp

This sounds like you may have added some fees on at the beginning of the mortgage. These tend to be charged at the standard variable rate with Halifax if I'm not mistaken. So that means if rates do move, so will that small portion of the mortgage payment relating to fees added on

HTH

regularsaver1

Yes fees are charged at standard variable rate

It could also be where you are overpaying meaning your actual required payment is less - and you are overpaying more

hondacivic

thanks very much for the replies, I am clearer now. The last time I called Halifax, they said I didn't have any added on fee's.