Halifax Mortgage Overpayment

waterman3

I went into a branch yesterday in order to make a lump sum overpayment to reduce the term. They told me that they could transfer the funds into my mortgage account but due to new regulations I'd have to call mortgage services in order to reduce the term.

I phoned mortgage services today and they said they'd have to go through an hour long mortgage review in order to reduce the term. About half an hour into the review, she asked if my employment was temporary or permanent and I told her i was in a temporary job which started 3 months ago. She went away and spoke to her manager and came back to tell me that I couldn't reduce the term as I was in a temporary job that only started 3 months ago.

I'd have to wait until I'd been in the job 12 months before I could reduce the term.

So I had to just transfer the funds I'd paid into my mortgage back out. Complete waste of time and appalling customer services.

Thrugelmir

Lenders now have regulations to comply with. Changing the term length is a contractual change. So the lender will need to perform an affordability to agree to the request.

There's no need to change the term length when making an overpayment. As you are employed on a temporary contract, I would have thought that flexibility with regards to committed future payments would be sensible.

MLSY

2 separate issues

making an overpayment on your current mortgage - should be no issue with Halifax to accept this

reducing the term of your mortgage - will be subject to affordability and underwriting

did you want do both things at the same time or just make an overpayment?

waterman3

I wanted to make an overpayment to reduce the term rather than reduce the monthly repayments.

roubaix

If it reduces the monthly repayments just set up a regular standing order to cover the difference so you are still paying the same amount which overall will have the effect that your mortgage will be paid early, the same as reducing term.

HoneyAndLemon

waterman3 wrote: »

I went into a branch yesterday in order to make a lump sum overpayment to reduce the term. They told me that they could transfer the funds into my mortgage account but due to new regulations I'd have to call mortgage services in order to reduce the term.

I phoned mortgage services today and they said they'd have to go through an hour long mortgage review in order to reduce the term. About half an hour into the review, she asked if my employment was temporary or permanent and I told her i was in a temporary job which started 3 months ago. She went away and spoke to her manager and came back to tell me that I couldn't reduce the term as I was in a temporary job that only started 3 months ago.

I'd have to wait until I'd been in the job 12 months before I could reduce the term.

So I had to just transfer the funds I'd paid into my mortgage back out. Complete waste of time and appalling customer services.

You could have still made the overpayment which would have reduced your balance, therefore saving you more interest overall.

Even if the overpayment itself doesn't affect the monthly payment or term immediately, you would be making the same payments on a smaller balance so you'd still pay it off sooner than your current term is set up to be.

Contractually changing the term is now subject to affordability rules, but if you have made an overpayment, then the term reduction is literally only going to change the term on the system. If they say that isn't possible due to the new rules and because of your type of employment, then just carry on making payments at the current amount on the lower balance and you'll still pay it off quicker.

waterman3

I'd be better off putting that money into a high interest account.

JustinR1979

You will still benefit when your term ends and you renew though surely?

TrickyDicky101

waterman3 wrote: »

I'd be better off putting that money into a high interest account.

You seem to be confused - there is no economic difference between overpaying (and then reducing the term) or overpaying and then making up the reduced monthly payment to the same level it would have been before over payment.

If the former was a good deal for you (better than putting the money into a high interest account) then it is still a good deal even if you can't reduce the contractual term.

MABLE

We have been overpaying our mortgage for the last 8 months and as such the term of the mortgage is decreasing each month. We did not need any interview to overpay but perhaps because we started overpaying before April this made a difference.

waterman3

TrickyDicky101 wrote: »

You seem to be confused - there is no economic difference between overpaying (and then reducing the term) or overpaying and then making up the reduced monthly payment to the same level it would have been before over payment.

If the former was a good deal for you (better than putting the money into a high interest account) then it is still a good deal even if you can't reduce the contractual term.

by reducing the term, you are paying significantly less interest over the course of the mortgage.